Disclosure Note Project

| | XYZ CONSTRUCTION CO., INC. | | | | |

| | NOTES TO FINANCIAL STATEMENTS | | | | |

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NOTE 1 | | Nature of Business | | | |

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XYZ Construction Co., Inc. (Company) is a general contractor specializing in heavy | |

industrial construction principally in Illinois The Company was incorporated in | |

Illinois in 1993. | | | | | |

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Significant Accounting Policies | | | | |

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INVENTORY | | | | | | |

The inventory is valued at the lower of cost or market, with cost being | |

determined on a first-in, first-out basis. | | | |

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PROPERTY, PLANT AND EQUIPMENT | | | | |

Property, plant and equipment are stated at cost less accumulated amortization. | |

Amortization is recorded at rates designed to amortize the cost of capital assets over |

their estimated useful lives. | | | | |

Amortization rates used are as follows: | | | |

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Land | | | Not amortizable** | | |

Building | | | 35% declining balance | | |

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** - Under the GAAP, land is not amortized and any recovery costs can only be obtained |

by selling the land itself. | | | | | |

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NOTE 2 | | | | | | |

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PROPERTY, PLANT AND EQUIPMENT | | | | |

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| | | Accumulated | Book Value | | |

| | Cost | Amortization | 2012 | | |

Land | | $125,000 | ----------------- ** | | | |

Building | | $975,800 | $341,200 | $634,600 | | |

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NOTE 3 DUE TO SHAREHOLDER

The amount due to the shareholder bears interest at a rate determined annually and has no fixed terms of repayment.

Interest paid for 2012 was $1,823

NOTE 4 ACCOUNTS PAYABLE...