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Construction Joint Ventures | 9 Months Ended
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Sep. 30, 2020
Equity Method Investments and Joint Ventures [Abstract] |
Construction Joint Ventures |
6. | CONSTRUCTION JOINT VENTURES
The Company participates in joint ventures with other major construction companies and other partners, typically for large, technically complex projects, including design-build projects, when it is desirable to share risk and resources in order to seek a competitive advantage. Joint venture partners typically provide independently prepared estimates, furnish employees and equipment, enhance bonding capacity and often also bring local knowledge and expertise. These projects generally have joint and several liability. The Company selects joint venture partners based on its analysis of their construction and financial capabilities, expertise in the type of work to be performed and past working relationships with the Company, among other criteria. Joint ventures with a controlling interest—Where the Company has a controlling joint interest in a venture, the equity held by the remaining owners and their portions of net income (loss) are reflected in the Condensed Consolidated Balance Sheets line item “Noncontrolling interests” in “Stockholders’ equity” and the Condensed Consolidated Statements of Operations line item “Net income attributable to noncontrolling interests,” respectively. The Condensed Consolidated Statements of Changes in Stockholders’ Equity summarize the changes in the noncontrolling owners’ interests in subsidiaries and consolidated joint ventures. Joint ventures with a noncontrolling interest—Where the Company has a noncontrolling joint interest in a venture, the Company accounts for its share of the operations of such construction joint ventures on a pro-rata basis using proportionate consolidation on its Condensed Consolidated Statements of Operations and as a single line item in “Receivables from and equity in construction joint ventures” in the Condensed Consolidated Balance Sheets. This method is an acceptable modification of the equity method of accounting which is a common practice in the construction industry. Condensed combined financial amounts of joint ventures in which the Company has a noncontrolling interest and the Company’s share of such amounts which are included in the Company’s Condensed Consolidated Financial Statements are shown below:
| September 30, 2020 |  | December 31, 2019
Current assets | $ | 120,688 |  |  | $ | 92,710 |
Current liabilities | $ | (125,294) |  |  | $ | (86,705) |
Sterling’s receivables from and equity in construction joint ventures | $ | 13,802 |  |  | $ | 9,196 |
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Revenues | $ | 58,541 |  |  | $ | 40,875 |  |  | $ | 128,853 |  |  | $ | 127,565 |
Income before tax | $ | 7,814 |  |  | $ | 3,588 |  |  | $ | 14,487 |  |  | $ | 14,401 |
Sterling’s noncontrolling interest: |  |  |  |  |  |  |
Revenues | $ | 26,195 |  |  | $ | 20,119 |  |  | $ | 58,653 |  |  | $ | 61,774 |
Income before tax | $ | 3,541 |  |  | $ | 1,769 |  |  | $ | 6,559 |  |  | $ | 5,869 |
The caption “Receivables from and equity in construction joint ventures,” includes undistributed earnings and receivables owed to the Company. Undistributed earnings are typically released to the joint venture partners after the customer accepts the project as completed and the warranty period, if any, has passed. The Company must determine whether each joint venture in which it participates is a VIE. This determination focuses on identifying which joint venture partner, if any, has the power to direct the activities of a joint venture and the obligation to absorb losses of the joint venture or the right to receive benefits from the joint venture in excess of their ownership interests and could have the effect of requiring us to consolidate joint ventures in which we have a noncontrolling variable interest. The Company determined that the joint venture between Ralph L. Wadsworth Construction, LLC, a subsidiary of the Company (“RLW”) (51% owner), and SEMA Construction Inc. (“SEMA”) (49% owner) is a VIE because the Company is the primary beneficiary, as pursuant to the terms of the SEMA Operating Agreement, the Company is exposed to 51% of potential losses of the partnership. Summary financial information for SEMA is as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Revenues | $ | 4,266 |  |  | $ | 768 |  |  | $ | 11,734 |  |  | $ | 2,397 |
Operating income | $ | 290 |  |  | $ | 50 |  |  | $ | 961 |  |  | $ | 162 |
Net income | $ | 292 |  |  | $ | 51 |  |  | $ | 967 |  |  | $ | 164 |

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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