F-1- DEVELOPMENT-STAGE ENTERPRISES

Question 1

Q: Define development-stage enterprises.

FAR 1-44

Answer 1

• Enterprise that devotes substantially all of its efforts to establishing a new business and either planned principal operations have not commenced or no significant revenue has been generated therefrom.

Question 2

Q: Indicate any special accounting treatment for development-state enterprises.

FAR 1-45

Answer 2

Same generally accepted accounting principles as established operating enterprises, with additional disclosures.

• Identify statements as those of a development-state enterprise.
• Accumulated losses identified as “deficit accumulated during development stage.”
• In the Income Statement, show revenue and expenses, and cumulative total of both amounts from company’s inception.
• In the Statement of Cash Flows, include cumulative amounts of cash inflows and outflows from enterprise’s inception and current amounts of cash inflows and outflows for each period presented.
• Issue a separate statement of stockholders’ equity, indicating shares issued, date of issuance, dollar amounts assigned, and noncash consideration, if any.