MASTER ANNUAL REPORT

Frenchman’s Creek, Inc. and Subsidiary

Notes to Consolidated Financial Statements ______________________________________________________________________________________________________________

Note 1. Nature of Organization and Significant Accounting Policies (Continued) Certificates of deposit: Certificates of deposit earn interest at rates from 1.21% to 1.25% and mature in July 2018 and March 2019. Board designated funds: Designated funds consist of cash and cash equivalents, certificates of deposits and assessments received for specific projects or purposes. These funds are designated for specific capital expenditures and payments to resigned members. The funds are provided by initiation fees, member assess- ments, proceeds from the sale of property and equipment and other capital sources of funds including lines of credit and long-term debt. Member receivables: Member receivables are carried at original billing amounts. Management evaluates member receivables on a monthly basis. An allowance for doubtful receivables is recorded to the extent that outstanding receivable balances exceed a member’s certificate redemption value. A member receivable is considered past due 30 days after the due date. Interest is charged on member re- ceivables that are outstanding for more than 30 days at a rate of 1.5% per month. After 45 days, the Associa- tion will issue a certified letter giving a 45-day notice of the intent to lien the property of the member in the event the full payment is not received. A member with two 45-day letters received in a 12-month period will have the annual dues, fees and assessments accelerated and payment will be due in full. In addition the Board of Governors may suspend charging privileges as deemed necessary. After 60 days, the association levies a service charge of $100 per day, to a maximum of $1,000, until payment is received in full. The mem- ber and all persons deriving privileges from such member’s membership will be automatically suspended from all privileges and access to the Recreational Facilities. All dues, fees and assessments for the current fiscal year will be accelerated and will be required to be paid in full prior to reinstatement. In the event of sus- pension, a reinstatement fee of $500 may be imposed. Foreclosure proceedings will commence 45 days from the date of lien. Please see the Frenchman’s Creek Credit Policy for complete details. Pursuant to its Bylaws, the Association has the right to institute collection or legal actions against any mem- ber in arrears with all costs, including attorney’s fees, for collection or legal action being the responsibility of said members.

Inventories: Inventories are valued at the lower of cost (first-in, first-out method) or net realizable value. In- ventories consist of food, beverage, pro shop and fitness merchandise.

Property and equipment: Property and equipment are recorded at cost. Depreciation is being computed by the straight-line method based on the following estimated useful lives of the depreciable assets.

Years

Land improvements

5-15

Buildings and improvements Furniture, fixtures and equipment

15-40

3-15

Common property: The Association holds title to or has effective ownership of common property consisting of common area land, a clubhouse, a beach club, two golf courses, roads, street lighting, canals and ponds, golf course maintenance facility, and a gate and guardhouse, along with various vehicles and maintenance equipment and various other property. The Association is responsible for preserving and maintaining these properties.

2018/2019 Annual Report Page 35