| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A
summary of the principal accounting policies are set out below: Cash The
Company maintains its cash balances in interest and non-interest-bearing accounts which do not exceed Federal Deposit Insurance Corporation
limits. Principles
of Consolidation The
accompanying consolidated financial statements include the accounts of Kibush Capital and Aqua Mining. All intercompany accounts and
transactions have been eliminated. Other
Comprehensive Income and Foreign Currency Translation FASB
ASC 220-10-05, Comprehensive Income The
accompanying consolidated financial statements are presented in United States dollars. Use
of Estimates The
preparation of financial statements in conformity with Generally Accepted Accounting Principles in the United States of America (“GAAP”)
requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Significant estimates made by management are, recoverability of long-lived assets, valuation and useful lives of
intangible assets, valuation of derivative liabilities, and valuation of common stock, options, warrants and deferred tax assets. Actual
results could differ from those estimates. Non-Controlling
Interests Investments
in associated companies over which the Company has the ability to exercise significant influence are accounted for under the consolidation
method, after appropriate adjustments for intercompany profits and dividends. In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” It requires an acquirer to recognize, at the acquisition
date, the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at their full fair values as of
that date. In a business combination achieved in stages (step acquisitions), the acquirer will be required to re-measure its previously
held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss in earnings. The acquisition-related
transaction and restructuring costs will no longer be included as part of the capitalized cost of the acquired entity but will be required
to be accounted for separately in accordance with applicable generally accepted accounting principles. U.S. SFAS No. 141(R) applies prospectively
to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on
or after December 15, 2008. A
non-controlling interest in a subsidiary is an ownership interest in a consolidated entity that is reported as equity in the consolidated
financial statements and separate from the Company’s equity. In addition, net income/(loss) attributable to non-controlling interests
is reported separately from net income attributable to the Company in the consolidated financial statements. The Company’s consolidated
statements present the full amount of assets, liabilities, income and expenses of all of our consolidated subsidiaries, with a partially
offsetting amount shown in non-controlling interests for the portion of these assets and liabilities that are not controlled by us. Property
and Equipment Property
and equipment are stated at cost. Depreciation is computed using the straight-line method over estimated useful lives as follows: SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIVES
Plant
equipment 2 15
Motor
Vehicle 4 15 Maintenance
and repairs are charged to expense as incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement
or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting
gains or losses are reflected in the consolidated statement of operations. Impairment
of Long-Lived Assets In
accordance with FASB ASC 360-10-5, Accounting for the Impairment or Disposal of Long-Lived Assets
● Significant
under performance relative to expected historical or projected future operating results.
● Significant
changes in its strategic business objectives and utilization of the assets.
● Significant
negative industry or economic trends, including legal factors. If
the Company determines that the carrying values of long-lived assets may not be recoverable based upon the existence of one or more of
the above indicators of impairment, the Company’s management performs an undiscounted cash flow analysis to determine if impairment
exists. If impairment exists, the Company measures the impairment based on the difference between the asset’s carrying amount and
its fair value, and the impairment is charged to operations in the period in which the long-lived asset impairment is determined by management. During
the year ended September 30, 2020, the Aqua Mining business continued to generate material operating losses. Consequently, management
has re-assessed the carrying value of the existing plant and equipment and its ability to generate positive cash flows over the remaining
useful life of the group of assets used within the Timber milling business. Managements current assessment, which takes into consideration
the ongoing uncertain impacts of COVID-19 on market supply chains and the access to equipment required for timber processing facility
enhancements, indicates that the current group of assets are impaired and need to be written down to a carrying value indicative representative
of fair value. Managements current assessment of the carrying value is nil as there is no reliable secondary market at present for these
assets in the Port Moresby region combined with other market constraints relating to COVID-19 impacts on supply chains. Management will
continue to explore opportunities to expand the supply and processing capacity of the timber milling process with a view to re-assessing
the carrying value of the asset group should positive operating cash flows start to be generated in future periods. The
carrying value of the Company’s investment in Joint Venture contract with leaseholders of certain Mining Leases in Papua New Guinea
represents its ownership, accounted for under the equity method. The ownership interest is not adjusted to fair value on a recurring
basis. Each reporting period the Company assesses the fair value of the Company’s ownership interest in Joint Venture in accordance
with FASB ASC 325-20-35. Each year the Company conducts an impairment analysis in accordance with the provisions within FASB ASC 320-10-35
paragraphs 25 through 32. Fair
Value of Financial Instruments The
carrying amounts of the Company’s cash, accounts payable and accrued expenses approximate their estimated fair values due to the
short-term maturities of those financial instruments. The Company believes the carrying amount of its notes payable approximates its
fair value based on rates and other terms currently available to the Company for similar debt instruments Beneficial
Conversion Features of Debentures In
accordance with FASB ASC 470-20, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios, we recognize the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder
the ability to convert debt into common stock at a price per share that is less than the trading price to the public on the day the loan
is made to us. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess
of the conversion rate) of the beneficial conversion feature of debentures and related accruing interest is recorded as a discount to
the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related
debt using the interest method. Loss
per Share The
Company applies FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss)
available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed
similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon
exercise of stock options and warrants using the treasury stock method, except for periods for which no common share equivalents are
included because their effect would be anti-dilutive. Income
Taxes Income
taxes are accounted for in accordance with ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred
tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities are measured
using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered or settled. Valuation
allowances for deferred tax assets are established when it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Mineral
Property, Mineral Rights (Claims) Payments and Exploration Costs Pursuant
to EITF 04-02, “Whether Mineral Rights are Tangible or Intangible Assets and Related Issues”, the Company has an accounting
policy to capitalize the direct costs to acquire or lease mineral properties and mineral rights as tangible assets. The direct costs
include the costs of signature (lease) bonuses, options to purchase or lease properties, and brokers’ and legal fees. If the acquired
mineral rights relate to unproven properties, the Company does not amortize the capitalized mineral costs, but evaluates the capitalized
mineral costs periodically for impairment. The Company expenses all costs related to the exploration of mineral claims in which it had
secured exploration rights prior to establishment of proven and probable reserves. Accounting
Treatment of Mining Interests At
this time, the Company does not directly own or directly lease mining properties. However, the Company does have contractual rights and
governmental permits which allow the Company to conduct mining exploration on the properties referenced in this report. These contractual
relationships, coupled with the government permits issued to the Company (or a subsidiary), are substantially similar in nature to a
mining lease. Therefore, we have treated these contracts as lease agreements from an accounting perspective. Research
and Development Research
and development costs are recognized as an expense in the period in which they are incurred. The Company incurred no Recent
Accounting Pronouncements In
October 2018, FASB issued Accounting Standards Update 2018-16, Derivaties and Hedging (Topic 805): Inclusion of the Secured Overnight
Financing Rate (SOFR) Overight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. The ASU amends ASC 815
to add the OIS rate based on the SOFR as a fifth US benchmark interest rate. We do not expect the adoption of this ASU to have a material
effect on our consolidated financial statements. In
October 2018, FASB issued Accounting Standards Update 2018-17: Consolidation (Topic 810): Targeted Improvements to Related Party Guidance
for Variable Interest Entities. This standard expands the application of a specific private company accounting alternative related to
VIEs and changes the guidance for determining whether a decision-making fee is a variable interest. We do not expect the adoption of
this ASU to have a material effect on our consolidated financial statements. In
November 2018, FASB issued Accounting Standards Update 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between
Topic 808 and Topic 606. The ASU amends ASC 808 to clarify ASC 606 should apply in entirety to certain transactions between collaborative
arrangement participants. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements. In
November 2018, FASB issued Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit
Losses. The ASU changes the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2021, including interim periods
within those fiscal years. Thus, the effective date for such entities’ annual financial statements is now aligned with that for
these interim financial statements. We are currently evaluating the impact that the standard will have on our consolidated financial
statements and related disclosures. In
December 2018, FASB issued Accounting Standards Update 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors. The amendments
are designed to make lessors adoption of the new leases standard easier such as accounting policy election on sales tax, exclude variable
payments for all lessor costs, and clarification on lessor costs. We are currently evaluating the impact that the standard will have
on our consolidated financial statements and related disclosures. In
March 2019, FASB Issued Accounting Standards Update 2019-01, Leases (Topic 842): Codification Improvements In
March 2019, FASB Issued Accounting Standards Update 2019-02 : Improvements to Accounting for Costs of Films and License Agreements
for Program Materials In
March 2019, FASB Issued Accounting Standards Update 2019-03, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections
(Topic 958). We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements as the ASU
is applicable to not-for-profit entities. In
April 2019, FASB Issued Accounting Standards Update 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit
Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments In
May 2019, FASB Issued Accounting Standards Update 2019-05, Targeted Transition Relief. ASU 2019-05 provides transition relief for ASU
2016-13 (“credit losses standard”) by providing entities with an alternative to irrevocably elect the fair value option for
eligible financial assets measured at amortized cost upon adoption of the new credit losses standard. For entities that have not yet
adopted ASU 2016-13, the effective dates are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05
is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption
is permitted once ASU 2016-13 has been adopted. We do not expect the adoption of this ASU to have a material effect on our consolidated
financial statements. In
May 2019, FASB Issued Accounting Standards Update 2019-06, Extending the Private Company Accounting Alternatives on Goodwill and Certain
Identifiable Intangible Assets to Not-for-Profit Entities. The amendments are affective upon issuance of the ASU. We do not expect the
adoption of this ASU to have a material effect on our consolidated financial statements. In
November 2019, the ASB issued Accounting Standards Update 2019-08-Compensation-Stock Compensation (Topic 718) and Revenue from Contracts
with Customers (Topic 606): Codification Improvements-Share-Based Consideration Payable to a Customer. This ASU will affect companies
that issue share-based payments (e.g., options or warrants) to their customers. Similar to issuing a cash rebate to a customer, issuing
a share-based payment to a customer can incentivize additional purchases. The share-based payments can also serve a strategic purpose
by aligning the interests of a supplier and its customer, because the customer’s additional purchases increase its investment in
the supplier. For entities that have not yet adopted the amendments in Update 2018-07, the amendments in this update are effective in
fiscal years beginning after December 15, 2019. We do not expect the adoption of this ASU to have a material effect on our consolidated
financial statements. In
November 2019, the FASB issued Accounting Standards Update 2019-09-Financial Services-Insurance (Topic 944). This ASU will affect companies
that issue share-based payments (e.g., options or warrants) to their customers. Similar to issuing a cash rebate to a customer, issuing
a share-based payment to a customer can incentivize additional purchases. The share-based payments can also serve a strategic purpose
by aligning the interests of a supplier and its customer, because the customer’s additional purchases increase its investment in
the supplier. The amendments in this Update are effective in fiscal years beginning after December 15, 2021. We do not expect the adoption
of this ASU to have a material effect on our consolidated financial statements. In
November 2019, the FASB issued Accounting Standards Update 2019-10-Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging
(Topic 815), and Leases (Topic 842): Effective Dates. This ASU discusses the FASB’s proposed ASU Codification Improvements to Hedge
Accounting, which would clarify certain amendments made by ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, to
the guidance in ASC 815 on hedging activities. The FASB issued the proposal in response to feedback and questions received from stakeholders
related to their implementation of ASU 2017-12. The ASU also discusses the recent issuance of FASB ASU No. 2019-10, Financial Instruments
– Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. The ASU provides a framework
to stagger effective dates for future major accounting standards and amends the effective dates for certain major new accounting standards
to give implementation relief to certain types of entities. Specifically, ASU 2019-10 changes some effective dates for ASU 2017-12 on
hedging, ASU 2016-02 on leasing, ASU 2016-13 on current expected credit losses, and ASU 2017-04 on simplifying the goodwill impairment
test. The amendments in this Update amend the mandatory effective dates Credit Losses for all entities as follows or fiscal years beginning
after December 15, 2019. The effective dates for Hedging after applying this update are as follows: for fiscal years beginning after
December 15, 2018. The effective dates for Leases after applying this Update are as follows for fiscal years beginning after December
15, 2018. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements. In
December 2019, the FASB issued Accounting Standards Update 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.
This ASU summarizes the FASB’s recently issued Accounting Standards Update (ASU) No. 2019-12, simplifying the Accounting for Income
Taxes. The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. The amendments in this update
are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We do not expect the
adoption of this ASU to have a material effect on our consolidated financial statements. In
January 2020, the FASB issued Accounting Standards Update 2020-01-Investments-Equity Securities (Topic 321), Investments-Equity Method
and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and
Topic 815. This ASU clarifies the interaction between accounting standards related to equity securities (ASC 321), equity method investments
(ASC 323), and certain derivatives (ASC815). The amendments in this Update are effective for fiscal years beginning after December 15,
2020. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements. In
March 2020, the FASB issued Accounting Standards Update 2020-03-Codification Improvements to Financial Instruments. The Standard is part
of FASB’s ongoing project to improve and clarify its Accounting Standards Codification and avoid unintended application. The items
addressed are not expected to significantly affect current practice or create a significant administrative cost for most entities. The
amendment is divided into issues 1 to 7 with different effective dates as follows: The amendments related to Issue 1, Issue 2, Issue
4, and Issue 5 are conforming amendments. For public business entities, the amendments are effective upon issuance of this update. For
all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those
fiscal years beginning after December 15, 2020. The amendment related to Issue 3 is a conforming amendment that affects the guidance
related to the amendments in 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets
and Financial Liabilities. The effective date of this update for the amendments to Update 2016-01 is for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. For entities that have not yet adopted the amendments related
to Update 2016-13, the effective dates and the transition requirements for these amendments are the same as the effective date and transition
requirements in Update 2016-13. For entities that have adopted the guidance in Update 2016-13, the amendments are effective for fiscal
years beginning after December 15, 2019, including interim periods within those fiscal years. For those entities, the amendments should
be applied on a modified-retrospective basis by means of a cumulative-effect adjustment to opening retained earnings in the statement
of financial position as of the date that an entity adopted the amendments in Update 2016-13. We do not expect the adoption of this ASU
to have a material effect on our consolidated financial statements. Other
accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until
a future date are not expected to have a material impact on our consolidated financial statements upon adoption. |
