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2. Summary of Significant Accounting Policies
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Mar. 31, 2012
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| Significant Accounting Policies [Text Block] |
The
accompanying unaudited consolidated financial statements of
the Company have been prepared in accordance with accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the disclosures
required by generally accepted accounting principles in the
United States for complete financial statements. In the
opinion of management, all of the normal and recurring
adjustments necessary to fairly present the interim financial
information set forth herein have been included. These
interim financial statements should be read in conjunction
with the consolidated financial statements and related
footnotes included in the Annual Report on Form 10-K of the
Company for the year ended December 31, 2011. These
consolidated financial statements and related notes are
presented in accordance with accounting principles generally
accepted in the United States expressed in US dollars and in
management’s opinion have been properly prepared within
reasonable limits of materiality and within the framework of
the significant accounting policies summarized below.
The
preparation of these financial statements in conformity with
U.S. generally accepted accounting principles 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
financial statements, and the reported amounts of revenues
and expenses during the reporting period. The Company
regularly evaluates estimates and assumptions related to
donated expenses, and deferred income tax asset valuations.
The Company bases its estimates and assumptions on current
facts, historical experience and various other factors that
it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about
the carrying values of assets and liabilities and the accrual
of costs and expenses that are not readily apparent from
other sources. The actual results experienced by the Company
may differ materially and adversely from the Company’s
estimates. To the extent there are material differences
between the estimates and the actual results, future results
of operations will be affected.
Basic
earnings per share are computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted
average number of shares outstanding (denominator) during the
period.
Diluted
earnings per share give effect to all dilutive potential
common shares outstanding during the period including stock
options, using the treasury stock method, and convertible
preferred stock, using the if-converted method.
In
computing diluted earnings per share, the average stock price
for the period is used in determining the number of shares
assumed to be purchased from the exercise of stock options or
warrants. Diluted earnings per share exclude all dilutive
potential shares if their effect is anti-dilutive. Because
the effect of conversion of the Company’s dilutive
securities is anti-dilutive, diluted loss per share is the
same as basic loss per share for the periods
presented.
The
Company adopted FASB ASC 820-10-50, “Fair Value
Measurements”. This guidance defines fair
value, establishes a three-level valuation hierarchy for
disclosures of fair value measurement and enhances disclosure
requirements for fair value measures. The three
levels are defined as follows:
- Level
1 inputs to the valuation methodology are quoted prices
(unadjusted) 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 assets or liability,
either directly or indirectly, for substantially the full
term of the financial instrument.
- Level
3 inputs to valuation methodology are unobservable and
significant to the fair measurement.
The
fair values of cash, accounts receivable, accounts payable
and accrued liabilities approximate their carrying values due
to the immediate or short-term maturity of these financial
instruments. Foreign currency transactions are
primarily undertaken in Canadian dollars. The
financial risk is the risk to the Company’s operations
that arise from fluctuations in foreign exchange rates and
the degree of volatility to these
rates. Currently, the Company does not use
derivative instruments to reduce its exposure to foreign
currency risk. Financial instrument that
potentially subject the Company to concentrations of credit
risk consists of cash. The Company places its cash in what it
believes to be credit-worthy financial institutions.
Office
equipment is recorded at cost. Amortization is provided
annually at rates and methods over their estimated useful
lives as follows, except in the year of acquisition when one
half of the rate is used. Management reviews the estimates of
useful lives of the assets every year and adjust them on
prospective basis, if needed.
Property,
plant and equipment are reviewed for impairment whenever
events or changes in the circumstances indicate that the
carrying value may not be recoverable. If the total of the
estimated undiscounted future cash flows is less than the
carrying value of the asset, an impairment loss is recognized
for the excess of the carrying value over the fair value of
the asset during the year the impairment occurs. Subsequent
expenditure relating to an item of office equipment is
capitalized when it is probable that future economic benefits
from the use of the assets will be increased.
The
Company recognizes revenue when earned, specifically when all
the following conditions are met:
The
Company’s functional currency is the United States
dollar and these financial statements are presented in United
States dollar unless otherwise stated. Monetary assets and
liabilities denominated in foreign currencies are translated
using the exchange rate prevailing at the balance sheet date.
Non-monetary items are translated at historical exchange
rates, except for items carried at market value, which are
translated at the rate of exchange in effect at the balance
sheet date. Revenues and expenses are translated
at average rates of exchange during the year. Gains and
losses arising on translation or settlement of foreign
currency denominated transactions or balances are included in
the determination of income. Foreign currency transactions
are primarily undertaken in Canadian dollars. The Company has
not, to the date of these financial statements, entered into
derivative instruments to offset the impact of foreign
currency fluctuations.
The
Financial Accounting Standards Board (FASB) has issued FASB
ASC 740-10. FASB ASC 740-10 clarifies the
accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements in accordance with
prior literature FASB Statement No. 109, Accounting for
Income Taxes. This standard requires a company to
determine whether it is more likely than not that a tax
position will be sustained upon examination based upon the
technical merits of the position. If the more likely than not
threshold is met, a company must measure the tax position to
determine the amount to recognize in the financial
statements. As a result of the implementation of
this standard, the Company performed a review of its material
tax positions in accordance with recognition and measurement
standards established by FASB ASC 740-10.
Deferred
taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences
and operating loss and tax credit carry-forwards and deferred
tax liabilities are recognized for taxable temporary
differences. Temporary differences are the
differences between the reported amounts of assets and
liabilities and their tax basis. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or
all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on
the date of enactment.
The
Company does not expect the adoption of any recently issued
accounting pronouncements to have a significant effect on its
financial statements.
In
June 2011, the Financial Accounting Standards Board (FASB)
issued Accounting Standards Update (ASU) 2011-05,
“Comprehensive Income (Topic 220): Presentation of
Comprehensive Income”, which is effective for annual
reporting periods beginning after December 15, 2011. ASU
2011-05 will become effective for the Company on January 1,
2012. This guidance eliminates the option to present the
components of other comprehensive income as part of the
statement of changes in stockholders’ equity. In
addition, items of other comprehensive income that are
reclassified to profit or loss are required to be presented
separately on the face of the financial statements. This
guidance is intended to increase the prominence of other
comprehensive income in financial statements by requiring
that such amounts be presented either in a single continuous
statement of income and comprehensive income or separately in
consecutive statements of income and comprehensive income.
The adoption of ASU 2011-05 is not expected to have a
material impact on our financial position or results of
operations.
In
May 2011, the FASB issued ASU 2011-04, “Fair Value
Measurement (Topic 820): Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. GAAP
and IFRSs”, which is effective for annual reporting
periods beginning after December 15, 2011. This guidance
amends certain accounting and disclosure requirements related
to fair value measurements. Additional disclosure
requirements in the update include:
(1)
for Level 3 fair value measurements, quantitative information
about unobservable inputs used, a description of the
valuation processes used by the entity, and a qualitative
discussion about the sensitivity of the measurements to
changes in the unobservable inputs;
(2)
for an entity’s use of a nonfinancial asset that is
different from the asset’s highest and best use, the
reason for the difference;
(3)
for financial instruments not measured at fair value but for
which disclosure of fair value is required, the fair value
hierarchy level in which the fair value measurements were
determined; and
(4)
the disclosure of all transfers between Level 1 and Level 2
of the fair value hierarchy. ASU 2011-04 will become
effective for the Company on January 1, 2012. The Company
does not expect that the guidance effective in future periods
will have a material impact on its financial
statements.
In
April 2011, the FASB issued ASU 2011-02, “Receivables
(Topic 310): A Creditor’s Determination of Whether a
Restructuring is a Troubled Debt Restructuring”. This
amendment explains which modifications constitute troubled
debt restructurings (“TDR”). Under the new
guidance, the definition of a troubled debt restructuring
remains essentially unchanged, and for a loan modification to
be considered a TDR, certain basic criteria must still be
met. For public companies, the new guidance is effective for
interim and annual periods beginning on or after June 15,
2011, and applies retrospectively to restructuring occurring
on or after the beginning of the fiscal year of adoption. The
Company does not expect that the guidance effective in future
periods will have a material impact on its financial
statements.
Certain
reclassifications have been made to the prior year’s
financial statements to conform to the current period’s
presentation.
FASB
ASC 220, “Comprehensive
Income”, establishes standards for the reporting
and display of comprehensive loss and its components in the
financial statements. As at December 31, 2011 the Company has
no items that represent a comprehensive loss and, therefore,
has not included a schedule of comprehensive loss in the
financial statements.
The
Company periodically evaluates the carrying value of
intangible and other long-lived assets. Impairment losses are
recognized when the estimated undiscounted future cash flows
associated with the asset or group of assets is less than
their carrying value. If impairment exits, an
adjustment is made to write the asset down to its fair value,
and a loss is recorded as the difference between the carrying
value and fair value. Based on its review, the Company
believes there were no impairments of its intangible and
other long-lived assets as of December 31, 2011.
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