| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Principles
of consolidation (b) Use
of estimates (c) Investments
under equity method When the
estimated amount to be realized from the investments falls below its carrying value, an impairment charge is recognized in the
consolidated statements of operations when the decline in value is considered other than temporary. (d) Cash and cash equivalents Cash equivalents
are placed with financial institutions with high credit ratings and quality. (e) Accounts
receivable (f) Loan receivables (g) Inventories (h) Goodwill The gross amount
of goodwill and accumulated impairment losses as of March 31, 2018 and 2019 are as follows:
Kayser Myanmar
$
Gross as of April 1, 2017, March 31, 2018 and 2019 77
Accumulated impairment loss as of April 1, 2017 and March 31, 2018 -
Impairment losses during the year ended March 31, 2019 (77 )
Accumulated impairment loss as at March 31, 2019 (77 )
Net as of March 31, 2018 77
Net as of March 31, 2019 - (h) Goodwill As a result of the two-step impairment
test, the Group has recognized a $77 impairment loss of Kayser Myanmar goodwill in selling, general and administrative expenses
during the year ended March 31, 2019, due to margin and revenue from contracts from customers declines as well as the lower growth
and margin expectation. No impairment expenses were recognized during the year ended March 31, 2017 and 2018. (i) Property, plant and
equipment (j)
Impairment or disposal of long-lived assets (other than goodwill) - (j) Impairment
or disposal of long-lived assets (other than goodwill) - continued - As a result of the comparison,
management has identified the sum of expected undiscounted cashflow of multiple types of machinery and equipment are more likely
than not below their fair value. The Group has recognized an impairment of long-lived assets amounted to $113 and $233 during the
years ended March 31, 2018 and 2019. The impairment has been recorded in cost of sales and selling, general and administrative
expenses, based on the nature of the impaired long-lived assets. No impairment expenses have been recognized long-lived assets
during the year ended March 31, 2017. (k) Concentration
of credit risk The risks with respect to accounts
receivables are mitigated by credit evaluations performed on the customers or debtors and ongoing monitoring of outstanding balances.
The Group establishes an allowance for doubtful receivables based upon estimates, factors surrounding the credit risk of specific
customers and other information. Accounts receivable are charged against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote. (l) Revenue recognition Product revenue recognition The Group's revenue from
contracts with customers is derived from product revenue principally from the sales of metal stamping and mechanical OEM and electric
OEM products directly to other consumer electronics product manufacturers. The Group sell goods to the customer under sales contracts
or by purchase orders. The Group has determined there to be one performance obligation for each of the sales contracts and purchase
orders. The performance obligations are considered to be met and revenue is recognized when the customer obtains control of the
goods. The Group has two major goods delivery channels, included: (1) Delivering
goods to customers' predetermined location, the Group has satisfied the contracts' performance obligations when the
goods have been delivered and relevant shipping documents have been collected by the Group; and (2) Picking up goods by customers
in the Group warehouse, the Group has satisfied the contracts' performance obligations when the goods have been picked up
and the acceptance document has been signed by the customers. The Group did not recognize any
revenue from contracts with customers for performance obligations satisfied overtime during the year ended March 31, 2019. Accordingly,
the timing of revenue recognition is not impacted by the new standard. The transaction price is generally
in the form of a fixed price which is agreed with the customer at contract inception. The transaction price is recorded net of
sales return, surcharges and value-added tax of gross sales. The Group has allocated the transaction price to each performance
obligation based on the sales contracts and purchase orders. The Group would request a deposit
from customers upon receiving the purchase order and issue bills to customers upon transfer control of goods and relevant acceptance
documents have been collected. Customers' deposits would be settled part of the outstanding bill upon receiving an acknowledgement
from customers. For the remaining balance of outstanding bills, Customers are required to pay over an agreed upon credit period,
usually between 30 to 75 days. Return Rights The Group does not provide its
customers with the right of return (except for product quality issue) or production protection. Customer is required to perform
product quality check before acceptance of goods delivery. The Group did not recognize for any refund liability according to the
product return on the consolidated balance sheets. Value-added taxes and surcharges The Group presents revenue net
of VAT and surcharges incurred. The surcharge is sales related taxes representing the City Maintenance and Construction Tax and
Education Surtax. The Group incurs expenses or pays fees to external delivery service providers, respectively, and records such
expenses and fees like shipping and handling expenses. Total VAT and surcharges paid by the Group during the years ended March
31, 2017, 2018 and 2019 amounted to $108, $57 and $77 respectively. Principals vs. agent accounting The Group records all product
revenue on a gross basis. To determine whether the Group is an agent or principal in the sale of products, the Group considers
the following indicators: the Group is primarily responsible for fulfilling the promise to provide the specified goods or services,
is subject to inventory risks before the specified goods have been transferred to a customer or after transfer of control to the
customers, and has discretion in establishing the price of the specified goods. Disaggregation of revenue The Group disaggregates its revenue
from different types of contracts with customers by principal product categories, as the Group believes it best depicts the nature,
amount, timing and uncertainty of its revenue and cash flows. The Group did not recognize any revenue in the reporting period from
performance obligation satisfied (or partially satisfied) during the year ended March 31, 2017 and 2018. See note 17 for product
revenues by segment. Contract balances The Group did not recognize any
contract asset as of April 1, 2018 and March 31, 2019. The timing between the recognition of revenue and receipt of payment is
not significant. The Group's contract liabilities
consist of deposits received from customers. As of April 1, 2018 and March 31, 2019, the balances of the contract liabilities are
$17 and $25, including deposits received from customers. All contract liabilities at the beginning of the year ended March 31,
2019 were recognized as revenue during the year ended March 31, 2019 and the all contract liabilities as of year ended March 31,
2019 are expected to be realized in the following year. As of April 1, 2019, the adoption of Topic 606 was no impact on the Group's
consolidation position. The Group has considered the
adopting of new guidance have no impact on the consolidated financial statements. In periods prior to the adoption of Topic 606,
the Group's accounting policy was to recognize revenue when persuasive evidence of an arrangement exists, products are delivered,
the price to the buyer is fixed or determinable and collectability is reasonably assured. (m) Staff retirement plan
costs (n) Foreign
currency translations and transactions The books and
records of the Company's major subsidiaries are maintained in their respective local currencies, the Hong Kong dollars, Myanmar
kyat and Renminbi, which are also their respective functional currencies. All assets and liabilities are translated at the rates
of exchange prevailing at the balance sheet date and all income and expense items are translated at the average rates of exchange
over the year. All exchange differences arising from the translation of subsidiaries' financial statements are recorded as a component
of comprehensive income (loss). (o) Income
taxes The Group recognizes the effect
of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are
measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected
in the period in which the change in judgment occurs. The Group records interest related to unrecognized tax benefits and penalties,
if any, within income tax expenses. (p) Operating leases (q) Net income (loss) per
share (r)
Comprehensive (loss) income The
Group presents the components of net income, the components of other comprehensive (loss) income and total comprehensive income
in two separate but consecutive statements. (s)
Fair value measurement and financial instruments
● Level
1 applies to assets or liabilities for which there are quoted prices in active markets
for identical assets or liabilities.
● Level
2 applies to assets or liabilities for which there are inputs other than quoted prices
included within Level 1 that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical
asset or liabilities in markets with insufficient volume or infrequent transactions (less
active markets); or model-derived valuations in which significant inputs are observable
or can be derived principally from, or corroborated by, observable market data.
● Level
3 applies to assets or liabilities for which there are unobservable inputs to the valuation
methodology that are significant to the measurement of the fair value of the assets or
liabilities. Determining
which category an asset or liability falls within the hierarchy requires significant judgment. The
Group did not have any financial instruments that were required to be measured at fair value on a recurring basis as of March
31, 2018 and 2019. As of March 31, 2018 and 2019, the Group did not have any non-financial assets and liabilities that were recognized
or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Group have any assets
or liabilities measured at fair value on a non-recurring basis. The
carrying amounts of financial instruments, which consist of cash and cash equivalents, accounts receivable, other current assets,
accounts payable and other liabilities approximate their fair values due to the short term nature of these instruments. (t)
Non-controlling interest (u)
Accounting standards issued but not adopted as of March 31, 2019 The
ASU requires a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial
adoption. An entity may choose to use either (1) the effective date or (2) the beginning of the earliest comparative period presented
in the financial statements at the date of initial application. The Group has elected to apply the transition requirements on
April 1, 2019, effective date rather than at the beginning of the earliest comparative period presented. This approach allows
for a cumulative effect adjustment in the period of adoption, and prior periods will not be restated. In addition, the Group has
elected the package of practical expedients permitted under the transition guidance, which does not require a reassessment of
prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting
policy election, the Group will exclude short-term leases (term of 12 months or less) from the balance sheet presentation and
will account for non-lease and lease components in a contract as a single lease component for all asset classes. The
Group analyzed the impact of ASU 2016-02 across all lease arrangements to evaluate and implement the new standard. The Group are
expected to meet the new accounting and disclosure requirements upon adoption on April 1, 2019. Based on the Company's preliminary
assessment, the Company expects to record a right-of-use asset of approximately $1,181 and a lease liability of approximately
$231 in the consolidated balance sheets on the adoption date of April 1, 2019. The impact on the Group's consolidated statements
of operations and consolidated statements of cash flows is not expected to be material. (u) Accounting standards issued
but not adopted as of March 31, 2019 - - In
January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill
Impairment". The update simplifies the subsequent measurement of goodwill by eliminating step 2 from the goodwill impairment
test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying
amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair
value. The update also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a
qualitative assessment and, if it fails that qualitative test, to perform step 2 of the goodwill impairment test. An entity still
has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is
necessary. The update should be applied on a prospective basis. The nature of and reason for the change in accounting principle
should be disclosed upon transition. The update is effective for any annual or interim goodwill impairment tests in fiscal years
beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing
dates after January 1, 2017. The guidance should be applied prospectively upon its effective date. The Group is considering adopting
of the new guidance will not have an impact on the consolidated financial statement. (u)
Accounting standards issued but not adopted as of March 31, 2019 - - In
October 2018, the FASB issued ASU No. 2018-17, Consolidation: Targeted Improvements to Related Party Guidance for Variable Interest
Entities, which modifies the guidance related to indirect interests held through related parties under common control for determining
whether fees paid to decision makers and service providers are variable interest. ASU 2018-17 is effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2019 and early adoption is permitted. The Group is currently
evaluating the impact of adopting this guidance. |
