| Summary of Significant Accounting Policies | 3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use
of Estimates The
preparation of the consolidated financial statements in conformity with US GAAP 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 the reported amounts of revenues and expenses during the reporting periods. Management
makes these estimates using the best information available at the time the estimates are made; however actual results could differ
materially from those estimates. Cash
and Cash Equivalents Cash
and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other
financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase
date of such investments. The Chinese Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign
Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Company
is permitted to exchange Chinese Renminbi for foreign currencies through banks that are authorized to conduct foreign
exchange business. Accounts
Receivable Financial
instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The
Company extends credit to its customers in the normal course of business and generally does not require collateral. The Company’s
credit terms are dependent upon the segment, and the customer. The Company assesses the probability of collection from each customer
at the outset of the arrangement based on a number of factors, including the customer’s payment history and its current
creditworthiness. If in management’s judgment collection is not probable, the Company does not record revenue until the
uncertainty is removed. Management
performs ongoing credit evaluations, and the Company maintains an allowance for potential credit losses based upon its loss history
and its aging analysis. The allowance for doubtful accounts is the Company’s best estimate of the amount of credit losses
in existing accounts receivable. Management reviews the allowance for doubtful accounts each reporting period based on a detailed
analysis of trade receivables. In the analysis, management primarily considers the age of the customer’s receivable, and
also considers the creditworthiness of the customer, the economic conditions of the customer’s industry, general economic
conditions and trends, and the business relationship and history with its customers, among other factors. If any of these factors
change, the Company may also change its original estimates, which could impact the level of the Company’s future allowance
for doubtful accounts. If judgments regarding the collectability of receivables were incorrect, adjustments to the allowance may
be required, which would reduce profitability. Accounts
receivable are recognized and carried at the original invoice amount less an allowance for any uncollectible amounts. An estimate
for doubtful accounts receivable is made when collection of the full amount is no longer probable. Bad debts are written off as
identified. No allowance for doubtful accounts was made for the six months ended June 30, 2019. Revenue
Recognition Revenue
is generated through sale of goods and delivery services. Revenue is recognized when a customer obtains control of promised goods
or services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for
those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue
and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the
Company expects to receive in exchange for those goods and services. The Company applies the following five-step model in order
to determine this amount: (i)
identification of the promised goods and services in the contract; (ii)
determination of whether the promised goods and services are performance obligations, including whether they are distinct in the
context of the contract; (iii)
measurement of the transaction price, including the constraint on variable consideration; (iv)
allocation of the transaction price to the performance obligations; and (v)
recognition of revenue when (or as) the Company satisfies each performance obligation. The
Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under Topic 606, the Company records revenue when
persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable.
The Company records revenue from the sale of product upon shipment or delivery of the products to the customer. Shipping
and handling costs Costs
for shipping and handling activities, including those activities that occur subsequent to transfer of control to the customer,
are recorded as cost of sales and are expensed as incurred. The Company accrues costs for shipping and handling activities that
occur after control of the promised good has transferred to the customer. Earnings
Per Share The
Company reports earnings per share in accordance with ASC 260 “ Earnings Per Share The
Company’s basic earnings per share is computed by dividing the net income available to holders by the weighted average number
of the Company’s ordinary shares outstanding. Diluted earnings per share reflects the amount of net income available to
each ordinary share outstanding during the period plus the number of additional shares that would have been outstanding if potentially
dilutive securities had been issued. Related
parties Parties,
which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly,
to control the other party or exercise significant influence over the other party in making financial and operating decisions.
Companies are also considered to be related if they are subject to common control or common significant influence. Income
Taxes The
Company accounts for income taxes using the asset and liability method prescribed by ASC 740 “ Income Taxes New
U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “ U.S. Tax Reform Foreign
Currency 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 statements of operations. The
reporting currency of the Company is United States Dollars (“US$”). The Company’s subsidiary in Seychelles,
Hong Kong and PRC maintains its books and record in United States Dollars (“US$”), Hong
Kong Dollars (“HK$”) and Chinese
Renminbi (“CNY ￥ ” )
respectively. In
general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not the US$ are translated
into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the
balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting
from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive
income within the statement of stockholders’ equity. Translation
of amounts from the local currencies of the Company into US$ has been made at the following exchange rates for the respective
periods:
As of and for the period ended
June 30, 2019
Period-end HK$ : US$1 exchange rate 7.75
Period-average HK$ : US$1 exchange rate 7.75
Period-end CNY￥ : US$1 exchange rate 6.87
Period-average CNY￥ : US$1 exchange rate 6.77 Fair
Value Measurement Accounting
Standards Codification (“ ASC Fair Value Measurements and Disclosures This
ASC establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described
below: Level
1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or
liabilities; Level
2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially
the full term of the asset or liability; and Level
3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable
(supported by little or no market activity). Recently
issued and adopted accounting pronouncements In February
2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)
No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required recognize the following for all leases (with
the exception of short-term leases) at the commencement date: 1) A lease liability, which is a lessee’s obligation to make
lease payments arising from a lease, measured on a discounted basis; and 2) A right-of-use asset, which is an asset that represents
the lessee’s right to use, or control the use of, a specified asset for the lease term. The new lease guidance simplified
the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities.
Lessees will no longer be provided with a source of off-balance sheet financing. The amendments in this ASU are effective for
fiscal years beginning after December 15, 2018, including interim periods within those years. The Company is currently
evaluating the impact ASU 2016-02 will have on its consolidated financial statements. In
June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses
on Financial Statements. This ASU requires a financial asset (or group of financial assets) measured at amortized cost basis to
be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted
from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected
on the financial asset. This Accounting Standards Update affects entities holding financial assets and net investment in leases
that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables,
net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded
from the scope that have the contractual rights to receive cash. For public business entities, the amendments in this Update are
effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. All entities
may adopt the amendments in this Update through a cumulative-effect adjustment to retained earnings as of the beginning of the
first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company is in the
process of evaluating the impact of the adoption of this pronouncement on its consolidated financial statements. The
Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will
have a significant impact on the Company’s consolidated financial statements. |
