$21,528

$25,569

Accounts receivable, less allowances for doubtful accounts of $2,829 in 1976 and $2,929 in 1975.

Unbilled work at approximate cost less reserves of $957 in 1976

and $983 in 1975, and progress payments received of $6,194
in 1976 and $6,914 in 1975.

Price Waterhouse & Co.-U.S. Firm

NOTES TO FINANCIAL STATEMENTS

Appendix D
Exhibit I

Note 1-Summary of significant accounting policies
Basis of presentation

The financial statements of the U.S. Firm combine the accounts of all U.S. offices, the offices of the Middle Americas Firm, and offices in Puerto Rico and the Dominican Republic

In accordance with the Articles of Partnership, the Firm's accounts are maintained on the basis of cash receipts and disbursements. Also, provision is made in the Articles for interests in the "Memorandum Account" as defined therein. The "Memorandum Account" includes billed but uncollected fees less reserves, unbilled work valued at the lesser of realizable value or approximate cost, and appropriate accruals and prepayments.

The accompanying financial statements combine the cash basis accounts with the "Memorandum Account" for the purpose of providing an overview of the operations for the year and of the position at the end of the year.

Currency translation

Foreign currency accounts are translated at appropriate current rates of exchange. The major portion of the net assets outside the United States are of a current nature. Exchange gains and losses arising from translation are not material and are included in income for the

year.

Depreciation and amortization

Depreciation of furniture and equipment is computed using accelerated methods over 6 to 8 years, and amortization of leasehold improvements is computed using the straight-line method over the terms of the leases.

Partnership income

The net income of the partnership is not profit in the conventional sense. It represents income for personal services and no allowance for partner compensation or the capital of the partners has been included in costs and expenses.

Income taxes

No provision is included in the statements for federal and state income taxes which are the liability of the individual partners. Other state and local taxes assessed against the Firm are not material.