Cpa Review- Far 1-7 (Development-Stage Enterprises (U.s. Gaap))

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Overview (4)

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Under U.S. GAAP, a development-stage enterprise is one in which either:

1. Principal operations have not yet commenced
2. Principal operations have generated an insignificant amount of revenue (or loss)
3. During the development stage, a company devotes most of its activities and resources toward establishing a business.
4. Start-up, organizational costs- expense immediately under GAAP

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Disclosure

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-Must issue the same F/S's as any other enterprise. Additional disclosures are as follows:

1. Identify the F/S's as those of a development stage enterprise

2. In the B/S, describe cumulative net losses as "deficit accumulated during the development stage"

3. In the I/S, show revenues and expenses for each period being presented and present a cumulative amount from the company's inception

4. In the statement of CF's, include- (1) cumulative amount of cash inflows and outflows from the company's inception and (2) current amounts of cash inflows and outflows for each period presented.

5. In statement of S/E include- (1) number of shares of stock (or other securities) issued, (2) date of issuance, (3) dollar amounts assigned, (4) if non-cash is involved in the issuance then include a description of the nature of the consideration and the basis for valuation.

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Card Front

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