FIRST CAROLINA INVESTORS, INC.
Notes to Financial Statements
December 31, 2007
(1) Summary of significant accounting policies, financial statement
presentation and organization
First Carolina Investors, Inc. was organized December 2, 1971 and
subsequently incorporated in the State of Delaware on July 1, 1987. On
January 3, 1995, First Carolina Investors, Inc. registered as a non-diversified,
closed-end management investment company under The Investment
Company Act of 1940.
(b) Investments in Securities
The Company records security transactions based on the trade date.
Investments in securities traded on a national securities exchange (or
reported on the NASDAQ national market) are stated at the last reported
sales price on the day of valuation; other securities traded in the over-the-
counter market and listed securities for which no sale was reported on that
date are stated at the last quoted bid price. Securities of privately-held
issuers or for which market quotations are not readily available are valued at
fair value as determined in good faith by the Company’s Pricing Committee
of the Board of Directors. In determining fair value, the Pricing Committee of
the Board of Directors may consider, if available, financial statements;
business and strategic plans; evaluations of major assets; quality of
management; legal, contractual or market restrictions or limitations on sale of
the securities; and other factors which the directors deem relevant. Realized
gains and losses are determined based on the average cost of the securities
Interest income is recognized on the accrual basis. Dividend income is
recognized on the ex-dividend date. Discounts and premiums on debentures
are amortized to cost over the life of the debentures.
(c) Income taxes
The Company is subject to federal and state corporate income taxes. The
Company accounts for deferred income taxes using the asset and liability