Pismo Coast Village, Inc., (Company) is a recreational vehicle camping resort. Its business is seasonal in nature with the fourth quarter, the summer, being its busiest and most profitable.

Inventory has been valued at the lower of cost or market on a first-in, first-out basis. Inventory is comprised primarily of finished goods in the general store and parts in the RV repair shop.

Depreciation of property and equipment is computed using an accelerated method based on the cost of the assets, less allowance for salvage value, where appropriate. Depreciation rates are based upon the following estimated useful lives:

Building and resort improvements	5 to 40 years
Furniture, fixtures, equipment, and leasehold improvements	5 to 31.5 years
Transportation equipment	5 to 10 years

The earnings per share are based on the weighted-average number of shares outstanding at the end of the period. The financial statements report only basic earnings per share, as there are no potentially dilutive shares outstanding.

For purposes of the statement of cash flows, the Company considers all highly liquid investments including certificates of deposit with maturities of three months or less when purchased, to be cash equivalents.

At June 30, 2011, the Company had cash deposits in excess of the $250,000 federally insured limit with Santa Lucia Bank of $1,506,131; however, in the past the Company has used an Excess Deposit Insurance Bond which secures deposits up to $1,500,000. It has recently been stated by bank regulators that this insurance bond is not enforceable. The FDIC's Temporary Transaction Account Guarantee Program provides unlimited coverage for non-interest bearing accounts until December 31, 2013. Santa Lucia Bank is participating in the Temporary Liquidity Guarantee Program which is a requirement to obtain the non-interest bearing coverage.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

The Company's revenue is recognized on the accrual basis as earned based on the date of stay. Expenditures are recorded on the accrual basis whereby expenses are recorded when incurred, rather than when paid.

The Company follows the policy of charging the costs of non-direct advertising as incurred. Advertising expense as $39,189 and $33,246 for the nine months ended June 30, 2011 and 2010, respectively. There was no advertising expense capitalized in prepaid expense.

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-06 "Improving Disclosures about Fair Value Measurements." The ASU amends previously issued authoritative guidance, requires new disclosures, clarifies existing disclosures, and is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the rollforward activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. As this requires only additional disclosures, the guidance will have no impact on the Company's financial position or results of operations.