Louisville Housing Authority Agenda and Packet 2013 07 25 - 2012 Audit Rpt

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East Street Limited Partnership Notes to Financial Statements December 31, 2012 and 2011 Note 1 - Principal Activity and Significant Accounting Policies Principal Activity,Risk,and Uncertainty East Street Limited Partnership(Partnership)was formed December 3, 1998, as a limited partnership under the laws of the State of Colorado and shall continue until December 31, 2042, unless dissolved or terminated at an earlier date. It was formed for the purpose to acquire,own,develop, construct and lease, manage and operate a building in Louisville, Colorado consisting of 17 units of affordable rental housing for low-income residents. The project began operations in December 2000. Substantially all of the Partnership's income is derived from the rental of its apartment units.All residential units within this project are subject to the contract restrictions regarding rental charges and other operating policies under the Low Income Housing Tax Credit Program. Income Taxes In accordance with the generally accepted method of presenting partnership financial statements, the financial statements do not include the personal assets and liabilities of the partners. Partnerships are generally not subject to income taxes. Instead,taxable earnings are passed through to the partners who are responsible for any taxes which may be due. The Partnership has adopted the provisions of FASB Accounting Standards Codification Topic ASC 740-10, on January 1, 2009. The implementation of this standard had no impact on the financial statements. As of the date of adoption, and as of December 31,2012 and 2011,the unrecognized tax benefit accrual was zero. The Partnership will recognize future accrued interest and penalties related to unrecognized tax benefits in income tax expense if incurred. The Partnership is no longer subject to Federal tax examinations by tax authorities for years before 2009 and state examinations for years before 2009. . Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.Actual results could differ from those estimates. Depreciation Depreciation is computed principally by the straight-line method over the following estimated useful lives: Building and improvements 27-30 years FASB Accounting Standards Codification Topic ASC 360-10 requires that long-lived assets held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the value is less than the carrying amount of the asset, an impairment loss is recognized for the difference.No impairment loss has been recognized during the years ended December 31, 2012 and 2011. 6