F1 - Development-Stage Enterprises

Question 1

Define development-stage enterprise.

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

Indicate any special accounting treatment for development-stage enterprises.

Answer 2

Same generally accepted accounting principles as established operating enterprise, with additional disclosures:

• Identify statements as those of a development-stage enterprise.
• Accumulated losses identified as “deficit accumulated during develpment 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 stockholdrs’ equity, indicating shares issued, date of issuance, dollar amounts assigned, and noncash consideration, if any.