| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and consolidation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) for interim financial reporting and in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited consolidated financial statements contained in this report reflect all adjustments that are normal and recurring in nature and considered necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the interim period are not necessarily indicative of the results expected for the full year. These unaudited, consolidated financial statements, footnote disclosures and other information should be read in conjunction with the financial statements and the notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2017. The consolidated financial statements are presented in US Dollars and include the accounts of the Group and its subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The results of subsidiaries acquired or disposed of during the years are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal. The Company has limited operations and is considered to be in the development stage under ASC 915-15. The following table depicts the identity of the subsidiaries:
Name of Subsidiary Place of Incorporation Attributable Equity Interest % Registered Capital Green Standard Technologies Enterprise, Inc. (1) Nevada 100 USD 100 Syndicore Asia Limited (2) Hong Kong 100 HKD 1 Z-Line International E-Commerce Limited (3) Hong Kong 55 HKD 8,000,000 Hunan Syndicore Asia Limited (4) PRC 100 HKD 10,000,000 Note: (1) Wholly owned subsidiary of ZZLL (2) Wholly owned subsidiary of ZZLL (3) 55% owned subsidiary of Syndicore Asia Limited (4) Wholly owned subsidiary of Syndicore Asia Limited The results of subsidiaries acquired or disposed of during the years are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal. Use of estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting year. These accounts and estimates include, but are not limited to, the valuation of accounts receivable, deferred income taxes and the estimation on useful lives of plant and equipment. Actual results could differ from those estimates. Concentrations of credit risk Financial instruments that potentially subject the Group to significant concentrations of credit risk consist principally of accounts receivable. In respect of accounts receivable, the Group extends credit based on an evaluation of the customers financial condition, generally without requiring collateral or other security. In order to minimize the credit risk, the management of the Group has delegated a team responsibility for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. Further, the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Group consider that the Groups credit risk is significantly reduced. Cash and cash equivalents Cash and cash equivalents include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less. The Group currently maintains bank accounts in HK and PRC only. Accounts receivable Accounts receivable are stated at original amount less allowance made for doubtful receivables, if any, based on a review of all outstanding amounts at the year end. An allowance is also made when there is objective evidence that the Group will not be able to collect all amounts due according to original terms of receivables. Bad debts are written off when identified. The Group extends unsecured credit to customers in the normal course of business and believes all accounts receivable in excess of the allowances for doubtful receivables to be fully collectible. The Group does not accrue interest on trade accounts receivable. The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis credit evaluations are preferred on all customers requiring credit over a certain amount. The Group had experienced the bad debts of $nil and $nil during the three months period ended September 30, 2018 and 2017 respectively. Plant and equipment Plant and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Maintenance, repairs and betterments, including replacement of minor items, are charged to expense; major additions to physical properties are capitalized. Depreciation of plant and equipment is provided using the straight-line method over their estimated useful lives at the following annual rates: Furniture and fixtures 20% - 50% Office equipment 20% Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. Revenue recognition The Group recognizes revenue when it is earned and realizable based on the following criteria: persuasive evidence that an arrangement exists, services have been rendered, the price is fixed or determinable and collectability is reasonably assured. The Group also evaluates the presentation of revenue on a gross versus a net basis through application of Emerging Issues Task Force No. (EITF) 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent. The consensus of this literature is that the presentation of revenue as the gross amount billed to a customer because it has earned revenue from the sale of goods or services or the net amount retained (that is, the amount billed to a customer less the amount paid to a supplier) because it has earned a commission or fee is a matter of judgment that depends on the relevant facts and circumstances. In making an evaluation of this issue, some of the factors that should be considered are: whether the Group is the primary obligor in the arrangement (strong indicator); whether it has general inventory risk (before customer 1 order is placed under or upon customer return)(strong indicator); and whether we have latitude in establishing price. The guidance clearly indicates that the evaluations of these factors, which at times can be contradictory, are subject to significant judgment and subjectivity. If the conclusion drawn is that the Group performs as an agent or a broker without assuming the risks and rewards of ownership of goods, revenue should be reported on a net basis. Advertising expenses Advertising expenses are charged to expense as incurred. The advertising expenses incurred for the three months ended September 30, 2018 and 2017 were $Nil and $Nil respectively, and for the nine months ended September 30, 2018 and 2017 were also $Nil and $Nil respectively. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The FASB issued Accounting Standard Codification Topic 740 (ASC 740) Income Taxes. ASC 740 clarifies the accounting for uncertainty in tax positions. This requires that an entity recognized in the consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. The adoption of ASC 740 did not have any impact on the Groups results of operations or financial condition for the nine months ended September 30, 2018. As of the date of the adoption of ASC 740, the Group has no material unrecognized tax benefit which would favorably affect the effective income tax rate in future periods. The Group has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of operations. Comprehensive income The Company has adopted FASB Accounting Standard Codification Topic 220 (ASC 220) Comprehensive income (formerly known as SFAS No. 130, Reporting Comprehensive Income), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments of the Company. Foreign currency translation For financial reporting purposes, the financial statements of the Group which are prepared using the functional currency have been translated into United States Dollars (US$). The functional currencies of the Companys subsidiary operating business unit based in Hong Kong and PRC are the Hong Kong Dollar (HK$) and Chinese Renminbi (RMB) respectively. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income. In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into US $ using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation are recorded in shareholders equity as part of accumulated other comprehensive income. The rate used in translation of Hong Kong dollars to US$ is a ratio of US$1.00=HK$7.80, a fixed exchange rate maintained between Hong Kong and United States derived from the Hong Kong Monetary Authority pegging HK$ and US$ monetary policy. Below is a table with foreign exchange rates used for translation: For the three months ended, (Average Rate) Sept 30, 2018 Sept 30, 2017 Chinese Renminbi (RMB) RMB 6.76966 RMB 6.67150 United States dollar ($) $ 1.00000 $ 1.00000 For the nine months ended, (Average Rate) Sept 30, 2018 Sept 30, 2017 Chinese Renminbi (RMB) RMB 6.76966 RMB 6.81629 United States dollar ($) $ 1.00000 $ 1.00000 As of (Closing Rate) Sept 30, 2018 Dec 31, 2017 Chinese Renminbi (RMB) RMB 6.84992 RMB 6.50271 United States dollar ($) $ 1.00000 $ 1.00000 For the three months, nine months and year ended, (Average Rate) and as of (Closing Rate) Sept 30, 2018 Dec 31, 2017 Hong Kong (HKD) HKD 7.80000 HKD 7.80000 United States dollar ($) $ 1.00000 $ 1.00000 Fair value of financial instruments The carrying values of the Groups financial instruments, including cash and cash equivalents, trade and other receivables, deposits, trade and other payables approximate their fair values due to the short-term maturity of such instruments. The carrying amounts of borrowings approximate their fair values because the applicable interest rates approximate current market rates. Stock-Based Compensation Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Share- Compensation (formerly, FASB Statement 123R), the Group measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the costs over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. During the nine months ended September 30, 2018 and 2017, the Group did not record any stock-based compensation expense respectively Basic and diluted earnings per share The Group computes earnings per share (EPS) in accordance with FASB Accounting Standard Codification Topic 260 (ASC 260) Earnings Per Share, and SEC Staff Accounting Bulletin No. 98 (SAB 98). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. The calculation of diluted weighted average common shares outstanding for three and nine months ended September 30, 2018 is based on the estimate fair value of the Groups common stock during such periods applied to options using the treasury stock method to determine if they are dilutive. Effective on October 5, 2017, the Company executed a reverse stock split pursuant to which fifty (50) shares of the Companys Common Stock, par value $.0001 per share, issued and outstanding, was reclassified as and changed, into one (1) share of the Companys outstanding Common Stock. The following tables are a reconciliation of the weighted average shares used in the computation of basic and diluted earnings per share for the periods presented: Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 (unaudited) (unaudited) $ $ Numerator for basic and diluted earnings per share: Net (Loss)/Income (43,374) (164,243) Denominator: Basic weighted average shares 20,062,063 1,476,431 Effect of dilutive securities - - Diluted weighted average shares 20,062,063 1,476,431 Basic earnings per share: (0.22) cents (11.12) cents Diluted earnings per share: (0.22) cents (11.12) cents Related parties transactions A related party is generally defined as (i) any person that holds 10% or more of The Groups securities and their immediate families, (ii) the Groups management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Group, or (iv) anyone who can significantly influence the financial and operating decisions of the Group. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Commitments and contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Recently implemented standards FASB Simplifies Adoption of New Leases Standard for Certain Land Easements. The FASB has issued Accounting Standards Update (ASU) No. 2018-01, Leases (Topic 842):Land Easement Practical Expedient for Transition to Topic 842, ASU 2018-01 is expected to reduce the cost of adopting the new leases standard for certain land easements. It is also an attempt to help ensure that companies can make a successful transition to the standard without compromising the quality of information provided to investors about these transactions. Land easements (also commonly referred to as rights of way) represent the right to use, access, or cross another entitys land for a specified purpose. Land easements are used by utility and telecommunications companies, for example, when they need to take a small strip of land, or easement, to bury wires. Not all companies have historically accounted for them as leases. Stakeholders pointed out that the requirement to evaluate all old and existing land easements, sometimes numbering in the tens of thousands, to determine if they meet the definition of a lease under the new standard could be very costly. They also noted there would be limited benefit to applying this requirement, as many of their land easements would not meet the definition of a lease, or even if they met that definition, many of their easements are prepaid and, therefore, already are recognized on the balance sheet. The land easements ASU addresses this by: · Providing an optional transition practical expedient that, if elected, would not require an organization to reconsider their accounting for existing land easements that are not currently accounted for under the old leases standard; and · Clarifying that new or modified land easements should be evaluated under the new leases standard, once an entity has adopted the new standard. The FASB issued an Accounting Standards Update (ASU) that helps organizations address certain stranded income tax effects in accumulated other comprehensive income (AOCI) resulting from the Tax Cuts and Jobs Act. ASU No. 2018-02, Income StatementReporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. The ASU requires financial statement preparers to disclose: · A description of the accounting policy for releasing income tax effects from AOCI; · Whether they elect to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act; and · Information about the other income tax effects that are reclassified. The amendments affect any organization that is required to apply the provisions of Topic 220, Income StatementReporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Organizations should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. FASB Issues Corrections and Improvements to Financial Instruments. Technical Corrections and Improvements to Financial InstrumentsOverall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, Financial InstrumentsOverall (Subtopic 825-10) · Issue 1: Equity Securities without a Readily Determinable Fair Value Discontinuation. Fair Value Measurement · Issue 2: Equity Securities without a Readily Determinable Fair Value Adjustments · Issue 3: Forward Contracts and Purchased Options · Issue 4: Presentation Requirements for Certain Fair Value Option Liabilities Derivatives and Hedging Embedded Derivatives Financial Instruments · Issue 5: Fair Value Option Liabilities Denominated in a Foreign Currency. · Issue 6: Transition Guidance for Equity Securities without a Readily Determinable Fair Value Financial Services Insurance For public business entities, ASU 2018-03 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. Public business entities with fiscal years beginning between December 15, 2017, and June 15, 2018, are not required to adopt ASU 2018-03 until the interim period beginning after June 15, 2018, and public business entities with fiscal years beginning between June 15, 2018, and December 15, 2018, are not required to adopt these amendments before adopting the amendments in ASU 2016-01. For all other entities, the effective date is the same as the effective date in ASU 2016-01. All entities may early adopt ASU 2018-03 for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, as long as they have adopted ASU 2016-01. FASB Adds SEC Guidance to the Codification on the Tax Cuts and Jobs Act. Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. Tax Cuts and Jobs Act ASU 2018-05 adds the following guidance, among other things, to the FASB Accounting Standards Codification regarding the Act: · Question 1: · Answer 1: · Question 2: · Answer 2: 1. Qualitative disclosures of the income tax effects of the Act for which the accounting is incomplete; 2. Disclosures of items reported as provisional amounts; 3. Disclosures of existing current or deferred tax amounts for which the income tax effects of the Act have not been completed; 4. The reason why the initial accounting is incomplete; 5. The additional information that is needed to be obtained, prepared, or analyzed in order to complete the accounting requirements under Topic 740; 6. The nature and amount of any measurement period adjustments recognized during the reporting period; 7. The effect of measurement period adjustments on the effective tax rate; and 8. When the accounting for the income tax effects of the Act has been completed. ASU 2018-05 is effective upon inclusion in the FASB Codification.
The FASB Issues ASU No. 2018-06 to Supersede Circular 202 for Depository and Lending Institutions. Codification Improvements to Topic 942, Financial ServicesDepository and Lending Accounting for Net Deferred Tax Charges (Circular 202) in Subtopic 942-740, Financial ServicesDepository and LendingIncome Taxes The amendments in ASU 2018-06 are effective immediately. The FASB has issued an Accounting Standards Update (ASU) intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. The ASU expands the scope of Topic 718, CompensationStock Compensation EquityEquity-Based Payments to Non-Employees The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other companies, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a companys adoption date of Topic 606, Revenue from Contracts with Customers FASB Releases ASU No. 2018-09. Codification Improvements · Amendments to Subtopic 220-10, Income Statement Reporting Comprehensive IncomeOverall. · Amendments to Subtopic 470-50, DebtModifications and Extinguishments Accounting for Certain Hybrid Financial Instruments The Fair Value Option for Financial Assets and Financial Liabilities 1. When the fair value option has been elected on debt that is extinguished, the net carrying amount of the extinguished debt equals its fair value at the reacquisition date, and 2. Related gains or losses in other comprehensive income must be included in net income upon extinguishment of the debt. · Amendments to Subtopic 480-10, Distinguishing Liabilities from EquityOverall. Derivatives and Hedging Majority Owners Accounting for a Transaction in the Shares of a Consolidated Subsidiary and a Derivative Indexed to the Noncontrolling Interest in That Subsidiary. · Amendments to Subtopic 718-740, CompensationStock CompensationIncome Taxes ASU No. 2018-09 · Amendments to Subtopic 805-740, Business Combinations Income Taxes · Amendments to Subtopic 815-10, Derivatives and Hedging Overall ASU No. 2018-09 · Amendments to Subtopic 820-10, Fair Value Measurement Overall ASU No. 2018-09 The amendments to paragraphs 820-10-35-18D through 35-18F and 820-10-35- 18H through 35-18L revise the current guidance to allow portfolios of financial instruments and nonfinancial instruments accounted for as derivatives in accordance with Topic 815 Topic 815 · Amendments to Subtopic 940-405, Financial ServicesBrokers and DealersLiabilities Balance SheetOffsettingOther Presentation Matters · Amendments to Subtopic 962-325, Plan AccountingDefined Contribution Pension PlansInvestmentsOther Transition and Effective Date. ASU No. 2018-09 ASU No. 2018-09 In addition, there are some conforming amendments in ASU No. 2018-09 Financial ServicesInsuranceReceivables Financial InstrumentsOverall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities The FASB has issued Accounting Standards Update (ASU) No. 2018-10, Codification Improvements to Topic 842, Leases . ASU No. 2018-10 · Issue 1: Residual Value Guarantees in Topic 460, Guarantees · Issue 2: Rate Implicit in the Lease · Issue 3: Lessee Reassessment of Lease Classification · Issue 4: Lessor Reassessment of Lease Term and Purchase Option · Issue 5: Variable Lease Payments That Depend on an Index or a Rate · Issue 6: Investment Tax Credits · Issue 7: Lease Term and Purchase Option · Issue 8: Transition Guidance for Amounts Previously Recognized in Business Combinations Topic 840 Topic 840 Topic 842 Topic 840 · Issue 9: Certain Transition Adjustments Topic 842 · Issue 10: Transition Guidance for Leases Previously Classified as Capital Leases under Topic 840 Topic 840 Topic 842 Topic 842 Topic 840 · Issue 11: Transition Guidance for Modifications to Leases Previously Classified as Direct Financing or Sales-Type Leases under Topic 840 Topic 840 Topic 842 Topic 842 · Issue 12: Transition Guidance for Sale and Leaseback Transactions · Issue 13: Impairment of Net Investment in the Lease · Issue 14: Unguaranteed Residual Asset Topic 840. · Issue 15: Effect of Initial Direct Costs on Rate Implicit in the Lease · Issue 16: Failed Sale and Leaseback Transaction Effective Date The amendments in ASU No. 2018-10 ASU No. 2016-02 Topic 842 ASU No. 2018-10 Topic 842 Topic 842 Topic 842 FASB Issues Targeted Improvements to Lease Standard . Leases (Topic 842): Targeted Improvements The targeted improvements in the ASU address areas our stakeholders identified as sources of unnecessary cost or complexity in the leases standard, stated FASB Chairman Russell G. Golden. They represent the FASBs commitment to proactively address implementation issues raised by our stakeholders to ensure a successful transition to the new standard without compromising the quality of information provided to investors. ASU 2018-11 Transition: Comparative Reporting at Adoption The amendments ASU 2018-11 , Leases An entity that elects this additional (and optional) transition method must provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840. The amendments do not change the existing disclosure requirements in Topic 840 (for example, they do not create interim disclosure requirements that entities previously were not required to provide). Separating Components of a Contract The amendments in ASU 2018-11 · The timing and pattern of transfer of the nonlease component(s) and associated lease component are the same. · The lease component, if accounted for separately, would be classified as an operating lease. An entity electing this practical expedient (including an entity that accounts for the combined component entirely in Topic 606) is required to disclose certain information, by class of underlying asset, as specified in the ASU. Effective Date The amendments in ASU 2018-11 related to separating components of a contract affect the amendments in ASU No. 2016-02, which are not yet effective but can be early adopted. For entities that have not adopted Topic 842 before the issuance of this ASU, the effective date and transition requirements for the amendments in this update related to separating components of a contract are the same as the effective date and transition requirements in ASU 2016-02. For entities that have adopted Topic 842 before the issuance of ASU 2018-11, the transition and effective date of the amendments related to separating components of a contract in this ASU are as follows: · The practical expedient may be elected either in the first reporting period following the issuance of this ASU or at the original effective date of Topic 842 for that entity. · The practical expedient may be applied either retrospectively or prospectively. All entities, including early adopters, that elect the practical expedient related to separating components of a contract in this ASU must apply the expedient, by class of underlying asset, to all existing lease transactions that qualify for the expedient at the date elected. FASB Improves Guidance for Insurance Companies that Issue Long-Duration Contracts To improve this area of financial reporting, the new ASU: · Requires updated assumptions for liability measurement. · Standardizes the liability discount rate. · Provides greater consistency in measurement of market risk benefits · Simplifies amortization of deferred acquisition costs. · Requires enhanced disclosures For calendar-year public companies, the changes will be effective in 2021. For all other calendar-year companies, the changes will be effective in 2022. Early adoption is permitted. The FASB has issued Accounting Standards Update (ASU) No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework ASU No. 2018-13 Removals The following disclosure requirements were removed from Topic 820: · The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; · The policy for timing of transfers between levels; · The valuation processes for Level 3 fair value measurements; and · For nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period. Modifications The following disclosure requirements were modified in Topic 820: · In lieu of a rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities; · For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investees assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and · The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty |
