| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
3 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of presentation The
Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”). Certain
amounts have been reclassified to conform to current year presentation Basis
of consolidation The
consolidated financial statements include the accounts of Ionix Technology Inc. and its subsidiaries. All significant
inter-company balances and transactions have been eliminated upon consolidation. Use
of Estimates The
Company’s consolidated financial statements have been prepared in accordance with US GAAP and this requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting
period. The significant areas requiring the use of management estimates include, but are not limited to, the allowance for doubtful
accounts receivable, estimated useful life and residual value of property, plant and equipment, provision for staff benefit, recognition
and measurement of deferred income taxes and valuation allowance for deferred tax assets. Although these estimates are based on
management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately
differ from those estimates and such differences may be material to our consolidated financial statements. Cash
and cash equivalents Cash
consists of cash on hand and cash in bank. Cash equivalents represent investment securities that are short-term, have high credit
quality and are highly liquid. Accounts
Receivable Accounts
receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally
30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer’s
credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered
past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end
of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current
economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance
for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the
receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means
of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after
all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any
off-balance-sheet credit exposure related to its customers. Based on the evaluation, the Company has determined that no allowance
for doubtful accounts is required as of June 30, 2017 and 2016, respectively for the continuing operation. The allowance of $71,318
for doubtful accounts was recorded as of June 30, 2016 which was included in the current assets from discontinued operation. Advances
to suppliers Advances
to suppliers represent prepayments for merchandise, which were purchased but had not been received. The balance of the advances
to suppliers is reduced and reclassified to inventories when the raw materials are received and pass quality inspection. Impairment
of long-lived assets In
accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets
such as property, plant and equipment held and used by the Company 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 evaluated
by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by
the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the
carrying amounts of the assets exceed the fair value of the assets. Revenue
recognition In
accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence
of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable
and collectability is reasonably assured. The
Company recognizes revenue from the sale of finished products upon delivery to the customer, whereas the title and risk of loss
are fully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”). The Company
is subject to VAT which is levied on the majority of the products at the rate of 17% on the invoiced value of sales. Income
taxes Income
taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under
this 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 basis. Deferred tax assets
and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Any 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. ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and discloses in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized
in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.
Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant
facts. As
of June 30, 2017 and 2016, the Company did not have any significant unrecognized uncertain tax positions. Comprehensive
income (loss) Earnings
(losses) per share Basic
earnings (losses) per ordinary share is based on the weighted effect of ordinary shares issued and outstanding, and is calculated
by dividing net profit by the weighted average shares outstanding during period. Diluted earnings per ordinary share is calculated
by dividing net profit by the weighted average number of ordinary shares used in the basic earnings per share calculation plus
the number ordinary shares that would be issued assuming exercise or conversion of all potentially dilutive ordinary shares outstanding. Foreign
currencies translation Transactions
denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates
prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional
currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting
exchange differences are recorded in the statement of comprehensive income (loss). The
reporting currency of the Company is the United States Dollar (“US$”). The Company’s subsidiaries in the People’s
Republic of China (“PRC”) maintain their books and records in their local currency, the Renminbi Yuan (“RMB”),
which is the functional currency as being the primary currency of the economic environment in which these entities operate. In
general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated
into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the
balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. Stockholders’ equity
is translated at historical rates. The gains and losses resulting from translation of financial statements of foreign subsidiaries
are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. The
exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the consolidated financial statements
are as follows:
June
30, 2017 June
30, 2016
Balance
sheet items, except for equity accounts 6.7744 6.6312
Items
in statements of comprehensive income (loss) and
cash flows 6.7028 6.3120 Fair
Value of Financial Instruments The
carrying value of the Company’s financial instruments: cash and cash equivalents, accounts and retention receivable, inventory,
prepayments and other receivables, accounts payable, income tax payable, other payables and accrued liabilities approximate at
their fair values because of the short-term nature of these financial instruments. Management
believes, based on the current market prices or interest rates for similar debt instruments, the fair value of note payable
approximate the carrying amount. The
Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”),
with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value
hierarchy that prioritizes the inputs used in measuring fair value as follows: Level
1: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; Level
2: Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments
in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant
inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets
or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using
market-based observable inputs; and Level
3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including
option pricing models and discounted cash flow models. Fair
value estimates are made at a specific point in time based on relevant market information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined
with precision. Changes in assumptions could significantly affect the estimates. The
Company has no financial assets or liabilities measured at fair value on a recurring basis. Recent
accounting pronouncements Recent
accounting pronouncements In
May 2014, the Financial Accounting Standards Board (“FASB”) issued, ASU 2014-09, “Revenue from Contracts
with Customers (Topic 606).” The guidance substantially converges final standards on revenue recognition between the FASB
and the International Accounting Standards Board providing a framework on addressing revenue recognition issues and, upon its
effective date, replaces almost all exiting revenue recognition guidance, including industry-specific guidance, in current U.S.
generally accepted accounting principles. In April 2015, the FASB proposed a one-year delay in the effective date and companies
will be allowed to early adopt as of the original effective date. Accordingly, this guidance will be effective for the Company
beginning the first quarter of fiscal year 2018. The Company plans to adopt the new revenue guidance in the fiscal year
of 2018 and is currently in the process of evaluating the impact on the Company’s consolidated financial statements. In
August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain
Cash Receipts and Cash Payments In
November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash In
January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition
of a Business In
January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying
the Test for Goodwill Impairment In
February 2017, the FASB issued ASU No. 2017-05, Derecognition and Partial Sales of Nonfinancial Assets |
