|SEVEN STARS CLOUD GROUP, INC. filed this Form 8-K/A on 08/14/2017|
Wecast Services Group Limited
December 31, 2015 and December 31, 2016
Note 1 - Operations and significant accounting policies (continued)
Use of estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) 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 periods. Such estimates include, but are not limited to, revenue recognition, impairment and allowances of trade receivable, inventory valuation, useful life of property and equipment, employee benefit accruals, income taxes and fair value measurements. Actual results could differ materially from those estimates.
Cash consists primarily of highly liquid investments with an original maturity of three months or less. Cash is carried at cost which approximates market value.
Accounts receivable, net
Accounts receivable are recognized at invoiced amounts and do not bear interest. The Group maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Group reviews its allowance for doubtful accounts receivable on an ongoing basis. In establishing the required allowance, management considers any historical losses, the customer’s financial condition, the accounts receivable aging, and the customer’s payment patterns. After all attempts to collect a receivable have failed and the potential for recovery is remote, the receivable is written off against the allowance.
There was no allowance for accounts receivable as of December 31, 2015 and 2016.
Inventories are stated at the lower of cost or market value. Cost of inventories is calculated using FIFO. The Group periodically assesses the recoverability of all inventories to determine whether adjustments are required to record inventory at the lower of cost or market value. Inventory that the Group determines to be obsolete are reduced to its estimated realizable value based on assumptions about future demand and market conditions. If actual demand is lower than the forecasted demand, additional inventory write-downs may be required.
There were no write-downs for inventories recognized as of December 31, 2015 and 2016.