NOTES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating lease terms, preparing lease documents and closing  the transaction. The carrying amount of costs are written-off to expense if the applicable lease is terminated prior to expiration of the initial lease term. Interest, real estate taxes and other carrying costs  are capitalized on projects under development and construction. Once construction is substantially completed and the assets are placed in service,  their rental income, real estate tax expense, property operating expenses (consisting of payroll, repairs and maintenance, utilities, insurance and other property related expenses) and depreciation are included in current operations. Property operating expenses are charged to operations as incurred. Repairs and maintenance expense totaled $4,927,000, $4,943,000 and $3,852,000, for 2004, 2003 and 2002, respectively, and is included in operating expenses in the accompanying consolidated financial statements. Interest expense capitalized totaled $3,227,000, $1,382,000 and $548,000, for 2004, 2003 and  2002, respectively. Construction in progress includes preconstruction  costs and development costs of active projects. Preconstruction costs associated with these active projects include legal, zoning and permitting costs  and other project carrying costs incurred prior to the commencement of construction. Development costs include direct construction costs and indirect costs incurred subsequent to the start of construction such as architectural, engineering, construction management and carrying costs consisting of interest, real estate taxes and insurance. Construction in progress balances as of December 31, 2004 and 2003 are  as follows: In the initial rental operations of development projects,  a project is considered substantially complete and available for occupancy upon completion of tenant improvements, but no later than one year from the cessation of major construction activity. Substantially completed portions of a project are accounted for as separate projects. Depreciation is calculated using  the straight-line method and estimated useful lives of  35 to 50 years for base buildings and up to 20 years  for certain other improvements. Depreciation expense  for the years ended December 31, 2004, 2003  and 2002 was $17,061,000, $14,649,000 and $15,526,000, respectively. Leasehold improvements are amortized, over the shorter of the lives of the  related leases or the useful life of the improvement, using the straight-line method. Lease Acquisition Costs Construction in Progress Certain initial direct costs incurred by the Company  in negotiating and consummating a successful lease  are capitalized and amortized over the initial base term of the lease. These costs total $17,745,000 and $15,344,000, net of accumulated amortization of $9,461,000 and $6,671,000, as of December 31, 2004 and 2003, respectively. Amortization expense, included in depreciation and amortization in the consolidated statements of operations, totaled $4,263,000, $3,189,000 and $2,295,000, for the years ended December 31, 2004, 2003 and 2002, respectively. Capitalized leasing costs consist of commissions paid to third party leasing agents as well as internal direct costs such as employee compensation and payroll related fringe benefits directly related to time spent performing leasing related activities. Such activities include evaluating the prospective tenant’s financial  Accounts receivable primarily represent amounts currently due from tenants in accordance with the terms of the respective leases. Receivables are reviewed monthly and reserves are established with a charge to current period operations when, in the opinion of management, collection of the receivable is doubtful. Accounts receivable in the accompanying consolidated financial statements are shown net of an allowance for doubtful accounts of $1,125,000 and $881,000, at December 31, 2004 and 2003, respectively. Accounts Receivable and Accrued Income Construction in Progress ( In thousands ) December 31, 2004 2003 Clarendon Center $ 14,976 $ 13,209 Shops at Monocacy -- 9,818 Broadlands Village II -- 1,151 Broadlands Village III 1,660 1,527 Lansdowne Town Square 6,872 6,138 Ashland Square 6,411 -- Kentlands Place 5,905 -- Olde Forte Village 4,755 116 Briggs Chaney Plaza 660 -- Other 1,379 1,529 Total $ 42,618 $ 33,488 22