| Basis of Significant Accounting policies | 2. Basis of Significant Accounting policies Principles
of Consolidation The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (GAAP). The Company’s consolidated financial statements include the accounts of the Company and its wholly
owned subsidiary, Shanghai Hongfu Health Management Ltd. All inter-company balances have been eliminated upon consolidation. The Company’s
fiscal year end is June 30. Use
of Estimates The
preparation of financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions
that affect the amounts of assets and liabilities, the identification and disclosure of impaired assets and contingent liabilities at
the date of the financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from
those estimates. Foreign
currency translation The
United States dollar (“USD”) is the Company’s reporting currency. The Company’s wholly owned subsidiary, Shanghai
Hongfu is located in Shanghai, China. The net sales generated, and the related expenses directly incurred from the operations are denominated
in local currency, Renminbi (“RMB”). The functional currency of the subsidiary is generally the same as the local currency. Assets
and liabilities measured in RMB are translated into USD at the prevailing exchange rates in effect as of the financial statement date
and the related gains and losses, net of applicable deferred income taxes, are reflected in accumulated other comprehensive income (loss)
in its consolidated balance sheets. Income and expense accounts are translated at the average exchange rate for the period. The Company
has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign
currency fluctuations. Certain
amounts in prior periods have been reclassified to conform with current period presentation. Revenue
recognition On
July 1, 2018 the Company adopted Accounting Standards Update (“ASU”) 2014-09, Accounting Standards Codification Topic 606,
Revenue from Contracts with Customers (ASC 606), which is a comprehensive new revenue recognition model that requires revenue to be recognized
in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received
in exchange for those goods or services. The Company adopted ASC 606 using the modified retrospective method. The Company evaluated its
revenue streams to identify whether it would be subject to the provisions of ASC 606 and any differences in timing, measurement or presentation
of revenue recognition. The Company’s main source of revenue is generated from operating senior living residences and business
apartment service. For the senior living industry, the Company recognizes resident fees and services, other than move-in fees, monthly
as services are provided. Shanghai
Hongfu entered a series leasing contracts with Shanghai Jinhong Business Hotel Co., Ltd. (“Shanghai Jinhong”) since November
2020, who subleases senior rooms, auxiliary building, property facilities and office spaces of the properties located at Zhangjiang,
Shanghai from Shanghai Hongfu for five to fifteen years. The Company recognize the rental income based on the lease terms using straight-line
method under ASC 842. Contract
A: On November 2020 and on April 2021 which amended on July 2021, the Company contracted with Shanghai Jinhong to lease a total 130 rooms
for five years and auto renew for another five years if no party in default pursuant to the contract terms. Shanghai Jinhong subleases
the rooms to the single independent resident and operates as business apartments. The initial room rental fee was around $ 6,200 6,400 Contract
B: On April 2021 and amended on July 2021, the Company entered a contract with Shanghai Jinhong to lease the auxiliary building including
retail spaces along the street for ten years for the average yearly rent of $ 158,910 1 Contract
C: On July 2021, supplementary agreement of contract A entered, that Shanghai Jinhong will reconstruct the parking lot in order to increase
the packing space to 40 and above. Both parties agree that 70% and 30% of the revenue generated from parking lot shared by Shanghai Hongfu
and Shanghai Jinhong, respectively. As of December 31, 2021, the renovation project for parking lots has not yet completed. Contract
D: On July 2021, the Company entered a contract with Shanghai Jinhong to lease the facility area, including a room, gym, office, conference
room & facilities for 15 years with eight-month-free rent holiday. The average annum rental income is around $ 12,000 Contract
E: On October 2021, the Company entered a contract with Shanghai Jinhong to lease an 500 meters square area, which can be used as office,
conferences &dorms for 15 years with eight-month rent holiday. The average annual rental income is around $ 37,600 Recently
issued accounting pronouncements adopted In
February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)
No. 2016-02 (Topic 842) “Leases.” Topic 842 supersedes the lease recognition requirements in Accounting Standards Codification
(“ASC”) Topic 840 “Leases.” Under Topic 842, lessees are required to recognize a right-of-use asset and a lease
liability for substantially all leases. Leases will continue to be classified as either finance or operating. Topic 842 is effective
for annual reporting periods and interim periods within those years beginning after December 15, 2018 with early adoptions permitted.
The Company adopted the new standard July 1, 2019. As part of the adoption of ASU 2016-02, the Company made an accounting policy election
that will not recognizing leases with an initial term of 12 months or less on the consolidated balance sheet. The Company only has one
month-to-month office lease since July 1, 2019. The adoption of this new accounting standard did not have an effect on the Company’s
consolidated financial statements. In
January 2017, the FASB issued ASU No. 2017-04, “Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment”,
which eliminates the requirement to calculate the implied fair value of goodwill, but rather requires an entity to record an i7mpairment
charge based on the excess of a reporting unit’s carrying value over its fair value. This amendment is effective for annual or
interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company adopted ASU No. 2017-04 on July 1, 2020
and the adoption did not have an impact on the Company’s interim financial position and results of operations. Recently
Issued Accounting Pronouncements Not Yet Adopted In
June 2016, the FASB issued ASU 20163-13, “Financial Instruments—Credit Losses”. The standard, including subsequently
issued amendments (ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11), requires a financial asset measured at amortized
cost basis, such as accounts receivable and certain other financial assets, to be presented at the net amount expected to be collected
based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable
forecasts that affect the collectability of the reported amount. In November 2019, the FASB issued ASU No. 2019-10 to postpone the effective
date of ASU No. 2016-13 for public business entities eligible to be smaller reporting companies defined by the SEC to fiscal years beginning
after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of this guidance on
its consolidated financial statements. |
