Meadowbrook

Meadowbrook 2012 Income Statement

Gross Revenue $800,000

Cost of Goods Sold

Property Taxes $8,000

Project Costs $418,000

Amenities Cost $83,333

Total Cost of Goods Sold $509,333

Gross Profit $290,667

Expenses

Advertising Expense $7,000

Selling Expense $50,000

Total Expenses $57,000

Net Income before Taxes $233,667*

Disclosures

*Earnings do not include Depreciation Expense

All inventory was ready for sale on October 1st, 2012

Revenue was not recognized until 12/31/12

Meadowbrook Corporation Current Assets 12/31/12

Inventory

Lot B $379,333

Lot C $349,333

Management Overview of 2012 Income Statement

Dear Manager,

I am very pleased to present you with Meadowbrook Corporations 2012 Income Statement and our current inventory available for sale in 2013. A copy is attached to the back of your packet. As you know we have been very busy over the last year developing the 10 acres of premium real estate that we decided to purchase at our last annual meeting. I am going to start by discussing our first sale, then breaking down the costs incurred in our development of the project, and finish up with our prospects for selling the remaining two lots available.

On December 31, 2012 we were able to finalize the sale of Lot A to Mr. Chuck Wagon. In just under a year we have been able to generate a profit on our investment and recognize some revenue for our shareholders. This is very exciting for us in the accounting department being able to recognize profit from our first sale right away. That is how the first line of the income statement is determined based on the $800,000 in cash that was retained from Mr. Wagon.

Rules and regulations regarding the recognition of revenue from real estate development projects like ours require that we us a single method of recognizing profit and apply it to all sales transactions within a within a given project like our 10 acre lot (ASC 976-605-25-1)....