Audiovox 2004 Annual Report Download - page 136

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Audiovox Specialized Applications, LLC And Subsidiary
Notes To Financial Statements
obligation for income taxes on the net income of the limited liability company
nor any provision for income tax expense.
It is the Company's intent to distribute funds to members to cover their income
tax liabilities. No provision has been made for any material distributions which
may be made subsequent to the balance sheet date.
The LLC operating agreement does not provide for separate classes of ownership.
Audiovox and ASA Electronics Corporation share equally in all LLC events and the
related member accounts are considered equal on a fair value basis.
Principles of consolidation:
The consolidated financial statements include the accounts of the Company and
CruiseTV, LLC ("CruiseTV") a wholly−owned subsidiary. All significant
intercompany accounts have been eliminated in consolidation.
Cash and cash equivalents:
The Company maintains its cash accounts in amounts which, at times, may be in
excess of insurance limits provided by the Federal Deposit Insurance
Corporation.
For purposes of the statement of cash flows, the Company considers investments
in various repurchase agreements with its bank, money market accounts and highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
Available−for−sale securities:
Available−for−sale securities consist of investments in marketable debt and
equity securities. Debt securities consist primarily of obligations of
municipalities. Equity securities consist of mutual funds that are traded or
listed on national exchanges.
The Company accounts for these investments in accordance with FASB Statement No.
115. Management determines the appropriate classification of securities at the
date individual investment securities are acquired and the appropriateness of
such classification is reassessed at each balance sheet date. Since the Company
neither buys investment securities in anticipation of short−term fluctuation in
market prices nor commits to holding debt securities to their maturities, the
investments in debt and equity securities have been classified as
available−for−sale in accordance with Statement No. 115. Available−for−sale
securities are stated at fair value, and unrealized holding gains and losses, if
any, are reported as a separate component of members' equity.
Trade receivables:
Trade receivables are carried at original invoice amount less an estimate made
for doubtful receivables based on a review of all outstanding amounts on a
monthly basis. Trade eceivables in the accompanying balance sheets at
Exhibit 99.1
7