Summary of Significant Accounting Policies and Organization (Policies) | 12 Months Ended |
Jul. 31, 2014 |
Summary of Significant Accounting Policies and Organization [Abstract] | ' |
Organization | ' |
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(A) Organization |
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Alternative Energy and Environmental Solutions, Inc. (the "Company") was incorporated under the laws of the State of Nevada on June 10, 2010 to market an innovative new biotechnology that utilizes nutrient stimulants – organic microbes – to extract coalbed methane more efficiently in high-production as well as from low-producing, depleted and abandoned coalmines in the U.S. Coalbed methane is a clean-burning natural gas used for heating in homes and is used to generate electricity. |
Use of Estimates | ' |
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(B) Use of Estimates |
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In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include valuation of equity based on transactions and the valuation on deferred tax assets. |
Cash and Cash Equivalents | ' |
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(C) Cash and Cash Equivalents |
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The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At July 31, 2014 and 2013, the Company had no cash equivalents. |
Loss Per Share | ' |
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(D) Loss Per Share |
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| In accordance with the accounting guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, Earnings per Share, basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. | | | | | | | | |
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| Since the Company reflected a net loss for the years ended July 31, 2014 and 2013, the effect of 5,826,122 and 6,155,100 warrants, respectively, is anti-dilutive. A separate computation of diluted loss per share is not presented. | | | | | | | | |
Income Taxes | ' |
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(E) Income Taxes |
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The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes (“ASC Topic 740”). Under ASC Topic 740, 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. 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. Under ASC Topic 740, 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. |
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The net deferred tax liability in the accompanying balance sheets includes the following amounts of deferred tax assets and liabilities: |
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| | | 31-Jul-14 | | | 31-Jul-13 | |
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| Deferred tax liability | | $ | - | | | $ | - | |
| Deferred tax asset | | | | | | | | |
| Net Operating Loss Carryforward | | | 460,931 | | | | 394,147 | |
| Valuation Allowance | | | (460,931 | ) | | | (394,147 | ) |
| Net deferred tax asset | | | - | | | | - | |
| Net deferred tax liability | | | - | | | | - | |
| | | $ | - | | | $ | - | |
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The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carryforwards before they will expire through the year 2034. |
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As of July 31, 2014, the Company has a net operating loss carryforward of approximately $1,195,649 available to offset future taxable income through July 31, 2034. The valuation allowance was establ.ished to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carryforwards before they will expire through the year 2034. The Company’s federal income tax returns for the years ended July 31, 2010 through July 31, 2014 remain subject to examination by the Internal Revenue Service and State Taxing Authorities as of July 31, 2014. |
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The net change in the valuation allowance for the year ended July 31, 2014 and 2013 was an increase of $66,784 and $43,099, respectively. |
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The net deferred tax liability in the accompanying balance sheets includes the following amounts of deferred tax assets and liabilities: |
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| | | | 2014 | | | | 2013 | |
| Federal | | | | | | | | |
| Current | | $ | - | | | $ | - | |
| Deferred | | | - | | | | - | |
| | | $ | - | | | $ | - | |
| State and Local | | | | | | | | |
| Current | | $ | - | | | $ | - | |
| Deferred | | | - | | | | - | |
| | | $ | - | | | $ | - | |
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The Company's income tax expense differed from the statutory rates (federal 34% and state 4.55%) as follows: |
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| | | 31-Jul-14 | | | 31-Jul-13 | |
| Statutory rate applied to earnings before income taxes: | | $ | (73,013 | ) | | $ | (49,250 | ) |
| Increase (decrease) in income taxes resulting from: | | | | | | | | |
| State income taxes | | | - | | | | - | |
| Change in deferred tax asset valuation allowance | | | 66,784 | | | | 43,099 | |
| Non-deductible expenses | | | 6,229 | | | | 6,151 | |
| Income Tax Expense | | $ | - | | | $ | - | |
Business Segments | ' |
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(F) Business Segments |
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The Company operates in one segment and therefore segment information is not presented. |
Revenue Recognition | ' |
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(G) Revenue Recognition |
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The Company will recognize revenue on arrangements in accordance with FASB ASC Topic 605, Revenue Recognition. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. |
Fair Value of Financial Instruments | ' |
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(H) Fair Value of Financial Instruments |
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The carrying amounts on the Company’s financial instruments including accounts payable and notes payable, approximate fair value due to the relatively short period to maturity for these instruments. |
Recent Accounting Pronouncements | ' |
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(I) Recent Accounting Pronouncements |
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| In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The update removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties (Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to the company’s current activities. Furthermore, the update removes an exception provided to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity—which may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014, including interim periods therein. Early application with the first annual reporting period or interim period for which the entity’s financial statements have not yet been issued (Public business entities) or made available for issuance (other entities). The Company adopted this pronouncement for the year ended July 31, 2014. | | | | | | | | |
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In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. As of August 31, 2014, we have adopted the provisions of this ASU. |