Forfeited Accounts — As of December 31, 2020 and 2019, forfeited non-vested accounts totaled $260,058 and $256,741, respectively. These accounts may be used to reduce future employer contributions or to pay administrative expenses.
Administrative Expenses — Administrative expenses of the Plan are paid by the Company as provided in the Plan document.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting — The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
Use of Estimates — The preparation of financial statements in conformity with GAAP requires Plan management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates.
Risk and Uncertainties — The Plan utilizes various investment instruments, including mutual funds, common stock, a common collective trust, self-directed brokerage accounts, and interest-bearing cash funds. Investment securities, in general, are exposed to various risks, such as interest rate risk, credit risk, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.
Included in investments at December 31, 2020 and 2019 are shares of the Company’s common stock with a fair value of $36,731,271 and $25,093,786, respectively, held by the Plan within participant accounts. This investment represents 23.9% and 19.8% of total investments at December 31, 2020 and 2019, respectively. At December 31, 2020, there were no shares of the Company’s common stock held by the Plan within self-directed brokerage accounts. At December 31, 2019, there were shares of the Company’s common stock with a fair value of $1,047,587 held by the Plan within self-directed brokerage accounts. This investment represents 0.8% of total investments at December 31, 2019. A significant decline in the market value of the Company’s stock would significantly affect the net assets available for benefits.
Payment of Benefits — Benefit payments to participants are recorded upon distribution. There were no amounts allocated to accounts of former participants who elected to withdraw from the Plan but had not been paid at December 31, 2020 and 2019.
Excess Contributions Payable — The Plan is required to return contributions received during the Plan year in excess of IRC limits. As of December 31, 2020 and 2019, total excess contributions payable was approximately $161,561 and $152,489.
Investment Valuation and Income Recognition — The Plan’s investments are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Administrative Expenses — Management fees and operating expenses charged to the Plan for investments in mutual funds and the common collective trust are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments.