| Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Method of Accounting The Company maintains its
general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and
notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles
in the United States of America (“US GAAP”) and have been consistently applied in the presentation of financial statements.
(b) Basis of Presentation The accompanying unaudited
financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim
financial information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in
the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a
full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position
and the results of operations and cash flows for the interim periods have been included. These interim financial statements should
be read in conjunction with the audited financial statements for the year ended December 31, 2016, as not all disclosures required
by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow
the same accounting policies and methods of computations as the audited financial statements for the year ended December 31, 2016.
(c) Principles of Consolidation The
consolidated financial statements include the accounts of the Company, its subsidiaries for which the Company is the primary beneficiary.
All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100%
of assets, liabilities, and net income or loss of those wholly-owned subsidiaries. As of September 30, 2017,
the detailed identities of the consolidating subsidiaries are as follows:
Name of company Place of incorporation Attributable equity interest% Registered capital
Fortune Delight Holdings Group Limited British Virgin Islands 100% $ 50,000
(d) Economic and Political Risks The Company’s potential
acquisition targets may operate outside of the United States. Foreign countries are subject to special considerations and significant
risks not typically associated with companies in the United States. These include risks associated with, among others, the political,
economic, legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in
the political and social conditions in foreign countries, and by changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion, restriction on international remittances, and rates and methods of taxation, among
other things.
(e) Use of Estimates In preparing financial statements
in conformity with US GAAP, 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 years. These accounts and estimates include, but are not limited to, the estimation
on useful lives of property, plant and equipment. Actual results could differ from those estimates.
(f) Cash and Cash Equivalents The Company accounts for cash
and cash equivalents as cash on hand, time deposits, certificates of deposit, and all highly liquid debt instruments with original
maturities of three months or less. As of September 30, 2017, the Company did not have any cash and cash equivalents.
(g) Accounts and Other Receivables Accounts receivable would
be presented net of allowance for bad debt. These provisions would be based on analysis historical bad debts, customer concentrations,
customer credit worthiness, current economic trends and changes in customer payment patterns.
(h) Inventories Inventories would be stated
at the lower of cost or market value.
(i) Property, Plant and Equipment Property and equipment will
be stated at cost less accumulated depreciation.
(j) Revenue Recognition The Company’s revenue
recognition policies are in accordance to Staff Accounting Bulletin (“SAB”) 104, included in the Codification as ASC
605, Revenue Recognition
(k) Selling, General & Administrative Expenses Selling, general and administrative
expenses are comprised of salaries, client entertainment, advertising, and travel, lodging expenses, include executive compensation,
general overhead such as the finance department and administrative staff, depreciation, office rental and utilities, and professional
fees.
(l) Foreign Currency Translation The Company’s current
functional and reporting currency is the United States Dollar, USD. Its previous subsidiaries used the Chinese Renminbi (RMB) and
Hong Kong Dollars (“HKD”) as its functional currencies.
(m) Income Taxes The Company adopts SFAS No.
109, Accounting for Income Taxes, included in the Codification as ASC 740, Income Taxes, On January 1, 2007, The Company
adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), included
in the Codification as ASC 740, Income Taxes.
(n) Fair Value of Financial Instruments For certain of the Company’s
financial instruments, including cash and equivalents, accounts and other receivables, accounts and other payables, accrued liabilities
and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair
Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company.
ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures
of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance
sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair
values because of the short period of time between the origination of such instruments and their expected realization and their
current market rate of interest. The three levels of valuation hierarchy are defined as follows:
● Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. The Company analyzes all financial
instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and
ASC 815. The Company’s financial
instruments include other payables, accrued liabilities and amounts due to related parties. Management estimates the carrying amounts
of the financial instruments approximate their fair values due to their short-term nature.
(o) Other Comprehensive Income The Company’s functional
currency for its operating subsidiaries was the Renminbi (“RMB”). For financial reporting purposes, the RMB was translated
into United States Dollars (“USD” or “$”) as the reporting currency. Assets and liabilities are translated
at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange
prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to
period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”. Gains
and losses resulting from foreign currency transactions are included in income. The Company uses FASB ASC
Topic 220, “Reporting Comprehensive Income”. Comprehensive loss is comprised of net loss and all changes to the statements
of stockholders’ equity, except for changes in paid-in capital and distributions to stockholders due to investments by stockholders.
(p) Business combination Business combinations are
accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations.
(q) Recent Accounting Pronouncements On January 5, 2016, the FASB
issued ASU 2016-01 “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets
and Financial Liabilities”, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments.
Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification
and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities
measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments.
The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017. On February 25, 2016, the
FASB issued ASU 2016-02 “Leases (Topic 842)”, its new standard on accounting for leases. ASU 2016-02 introduces a lessee
model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor
model with those in ASC 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can
be recognized). Furthermore, the ASU addresses
other concerns related to the current leases model. For example, the ASU eliminates the requirement in current U.S. GAAP for an
entity to use bright-line tests in determining lease classification. The standard also requires lessors to increase the transparency
of their exposure to changes in value of their residual assets and how they manage that exposure. The new model represents a wholesale
change to lease accounting. As a result, entities will face significant implementation challenges during the transition period
and beyond, such as those related to:
● Applying judgment and estimating.
● Managing the complexities of data collection, storage, and maintenance.
● Enhancing information technology systems to ensure their ability to perform the calculations necessary for compliance with reporting requirements.
● Refining internal controls and other business processes related to leases.
● Determining whether debt covenants are likely to be affected and, if so, working with lenders to avoid violations.
● Addressing any income tax implications. The new guidance will be effective
for public business entities for annual periods beginning after December 15, 2018 (e.g., calendar periods beginning on January
1, 2019), and interim periods therein. On March 15, 2016, the FASB
issued ASU 2016-07 “Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity
Method of Accounting”, which simplifies the equity method of accounting by eliminating the requirement to retrospectively
apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level
of ownership interest or degree of influence. Consequently, when an investment qualifies for the equity method (as a result of
an increase in the level of ownership interest or degree of influence), the cost of acquiring the additional interest in the investee
would be added to the current basis of the investor’s previously held interest and the equity method would be applied subsequently
from the date on which the investor obtains the ability to exercise significant influence over the investee. The ASU further requires
that unrealized holding gains or losses in accumulated other comprehensive income related to an available-for-sale security that
becomes eligible for the equity method be recognized in earnings as of the date on which the investment qualifies for the equity
method. The guidance in the ASU is
effective for all entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years;
early adoption is permitted for all entities. Entities are required to apply the guidance prospectively to increases in the level
of ownership interest or degree of influence occurring after the ASU’s effective date. Additional transition disclosures
are not required upon adoption. On March 17, 2016, the FASB
issued ASU 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue
Gross versus Net)”, which amends the principal-versus-agent implementation guidance and illustrations in the Board’s
new revenue standard (ASU 2014-09). The FASB issued the ASU in response to concerns identified by stakeholders, including those
related to (1) determining the appropriate unit of account under the revenue standard’s principal-versus-agent guidance and
(2) applying the indicators of whether an entity is a principal or an agent in accordance with the revenue standard’s control
principle. Among other things, the ASU clarifies that an entity should evaluate whether it is the principal or the agent for each
specified good or service promised in a contract with a customer. As defined in the ASU, a specified good or service is “a
distinct good or service (or a distinct bundle of goods or services) to be provided to the customer.” Therefore, for contracts
involving more than one specified good or service, the entity may be the principal for one or more specified goods or services
and the agent for others. The ASU has the same effective
date as the new revenue standard (as amended by the one-year deferral and the early adoption provisions in ASU 2015-14). In addition,
entities are required to adopt the ASU by using the same transition method they used to adopt the new revenue standard. On March 30, 2016, the FASB
issued ASU 2016-09 “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”,
which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic
entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification
in the statement of cash flows. On August 26, 2016, the FASB
issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230)”. Stakeholders indicated that there is diversity in practice
in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement
of Cash Flows, and other Topics. This Update addresses eight specific cash flow issues with the objective of reducing the existing
diversity in practice. The amendments in this Update are effective for public business entities for fiscal years beginning after
December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim
period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning
of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in
the same period. As a result, the Company has elected to early adopt this Update prospectively. As of September 30, 2017, and prior
period retrospective adjustments have not been applied. As of September 30, 2017,
except for the above, there are no recently issued accounting standards not yet adopted that would have a material effect on the
Company’s financial statements.
(r) Contingencies Certain conditions may exist
as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only
be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities,
and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that
are pending against the Company or un-asserted claims that may result in such proceedings, the Company’s management evaluates
the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought
or expected to be sought. If the assessment of a contingency
indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that
a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then
the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would
be disclosed. Loss contingencies considered
to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. |
