Universal Biosensors, Inc.
Notes to Consolidated Condensed Financial Statements (Unaudited)
The recent U.S. Federal Tax Reform has established a mandatory repatriation of foreign
accumulated undistributed earnings and profits (the E&Ps) for U.S. companies subsidiaries. In the past, none of these E&Ps were repatriated since such E&Ps were considered to be reinvested indefinitely in
the foreign location. The E&Ps provisions are applicable to our Company commencing with our fiscal year 2018, however the E&Ps mandatory repatriation provisions establishes measurement dates for various computations. In our
Companys case this date is December 31, 2017. The Companys estimated tax for the mandatory repatriation is estimated to be nil. However, the final tax due must be assessed with our December 31, 2018 closing figures. Any such
tax liability may be paid over a period of eight years starting on February 28, 2019. As of the issuance date of this report, the U.S. Securities and Exchange Commission and the Financial Accounting Standards Board have issued some preliminary
guidance, but have not issued final rules on how the effects of the U.S. Federal Tax Reform will be required to be reported for financial statements purposes.
At December 31, 2017 the Company has A$10,993,737 (A$22,616,230 at December 31, 2016) of accumulated tax losses available for carry
forward against future earnings, which under Australian tax laws do not expire but may not be available under certain circumstances. The Company also has A$11,048,336 (A$5,800,672 at December 31, 2016) of
non-refundable R&D tax offset as at December 31, 2017. The R&D Tax offset is a non-refundable tax offset, which assists to reduce a companys tax
liability. Once the liability has been reduced to zero, any excess offset may be carried forward into future income years. UBI has U.S. tax losses available for carry forward against future earnings of US$1,011,321 as of December 31, 2017 and
2016. Pursuant to the U.S. Federal Tax Reform, the effective tax rate of UBI has been reduced from 34% to 21%. The deferred tax benefit based on this new rate for UBI is US$212,377. HRL has Canadian tax losses available for carry forward against
future earnings of CAD$668,043 and CAD$95,096 as at December 31, 2017 and 2016, respectively.
We are subject to income taxes in the
United States, Canada and Australia. Tax returns up to and including the 2017 financial year have been filed in all these jurisdictions.
Asset retirement obligations (ARO) are legal obligations associated with the retirement and
removal of long-lived assets. ASC 410 Asset Retirement and Environmental Obligations requires entities to record the fair value of a liability for an asset retirement obligation when it is incurred. When the liability is initially recorded,
the Company capitalizes the cost by increasing the carrying amounts of the related property, plant and equipment. Over time, the liability increases for the change in its present value, while the capitalized cost depreciates over the useful life of
the asset. The Company derecognizes ARO liabilities when the related obligations are settled.
The ARO is in relation to our premises
where in accordance with the terms of the lease, the lessee has to restore part of the building upon vacating the premises.
ARO for the
years ended September 30, 2018 and December 31, 2017 was A$2,600,000.
Australian Goods and Services Tax (GST) and Canadian Harmonized Sales
Revenues, expenses and assets are recognized net of the amount of associated GST and HST, unless the GST and HST
incurred is not recoverable from the taxation authority. In this case it is recognized as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST and HST receivable
or payable. The net amount of GST and HST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated condensed balance sheets.
revenue from all sources based on the provisions of the U.S. SECs Staff Accounting Bulletin No. 104 and ASC 605 Revenue Recognition.
The Companys revenue represents revenue from sales of products, provision of services and collaborative research and development
We recognize revenue from sales of products at the time title of goods passes to the buyer and the buyer assumes the risks
and rewards of ownership, assuming all other revenue recognition criteria have been met. Generally, this is at the time products are shipped to the customer.