Cash Equivalents
Example 7.7: Cash Equivalents For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months or less.
Example 7.8: Cash Equivalents—No Cash Equivalents Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short‐term investments with original maturities of 90 days or less. The Company did not have cash equivalents as of December 31, 20X2 and 20X1.
Comprehensive Income
Example 7.9: Comprehensive Income (Loss) The Company reports comprehensive income (loss) in accordance with the FASB issued authoritative guidance which establishes standards for reporting comprehensive income (loss) and its component in financial statements. Comprehensive income (loss), as defined, includes all changes in equity during a period from nonowner sources.
Concentrations of Risk
Example 7.10: Concentration of Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company had cash balances in excess of the Federal Deposit Insurance Corporation limit as of December 31, 20X1.
Example 7.11: Concentration of Risk Accounts receivable are primarily from wholesale accounts, for landlord lease inducements, and from license and supply arrangements. The Company does not require collateral to support the accounts receivable; however, in certain circumstances, the Company may require parties to provide payment for goods prior to delivery of the goods. The accounts receivable are net of an allowance for doubtful accounts, which is established based on management's assessment of the credit risk of the underlying accounts.
Cash and cash equivalents are held with high‐quality financial institutions. The amount of cash and cash equivalents held with certain financial institutions exceeds government‐insured limits. The Company is also exposed to credit‐related losses in the event of nonperformance by the counterparties to the forward currency contracts. The credit risk amount is the Company's unrealized gains on its derivative instruments, based on foreign currency rates at the time of nonperformance. The Company has not experienced any losses related to these items, and it believes credit risk to be minimal. The Company seeks to minimize its credit risk by entering into transactions with credit‐worthy and reputable financial institutions and by monitoring the credit standing of the financial institutions with whom it transacts. It seeks to limit the amount exposure with any one counterparty.
The Company's derivative contracts contain certain credit risk‐related contingent features. Under certain circumstances, including an event of default, bankruptcy, termination, and cross‐default under the Company's revolving credit facility, the Company may be required to make immediate payment for outstanding liabilities under its derivative contracts.
Consolidation Policy
Example 7.12: Basis of Presentation and Basis of Consolidation: Combined Note The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). The consolidated financial statements include the accounts of all directly and indirectly owned subsidiaries and variable interest entity. All intercompany transactions and balances have been eliminated in consolidation.
Example 7.13: Basis of Consolidation with Detail The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: NSHL, New Star Peak Health Inc., New Star Healthnet Rehab Limited, Blake Assessments Inc., an 80% interest in New Star Healthnet Rockville Centre, Inc., a Recovery Physical Therapy and Health Centre clinic operated by NSHL, and a 50% stake in a joint venture with the Joseph Coffey Dental Hygiene Professional Corporation operated as New Star Dental. All of the Company's subsidiaries are incorporated under the laws of the Province of Victoria, Australia. All intercompany transactions have been eliminated.
Example 7.14: Basis of Consolidation, Including a VIE The consolidated financial statements include the accounts of the Company, its subsidiaries, and its affiliates. All significant intercompany transactions and balances are eliminated in consolidation. Global Shipping (“Global”), a People's Republic of China (PRC) corporation, is considered a variable interest entity (“VIE”), with the Company as the primary beneficiary. The Company, through Guangzhou Seaway, entered into certain agreements with Global, pursuant to which the Company receives 90% of Global's net income. The Company does not receive any payments from Global unless Global recognizes net income during its fiscal year. These agreements do not entitle the Company to any consideration if Global incurs a net loss during its fiscal year. If Global incurs a net loss during its fiscal year, the Company is not required to absorb such net loss.
As a VIE, Global's revenues are included in the Company's total revenues, and any loss from operations is consolidated with that of the Company. Because of contractual arrangements between the Company and Global, the Company has a pecuniary interest in Global that requires consolidation of the financial statements of the Company and Global.
The Company has consolidated Global's operating results because the entities are under common control in accordance with ASC 805‐10, Business Combinations. The agency relationship between the Company and Global and its branches is governed by a series of contractual arrangements pursuant to which the Company has substantial control over Global. Management makes ongoing reassessments of whether the Company remains the primary beneficiary of Global.
Example 7.15: Noncontrolling Interest The Company follows FASB ASC Topic 810, Consolidation, which governs the accounting for and reporting of noncontrolling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent's ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.
The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss).
Contingencies
Example 7.16: Contingencies In the ordinary course of business, the Company is involved in legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from claims against us, when a loss is assessed to be probable and the amount of the loss is reasonably estimable.
Derivatives
Example 7.17: Convertible Notes Payable and Derivative Instruments The Company has adopted
