VIRTUAL MEDICAL CENTRE INC

VIRTUAL MEDICAL CENTRE, INC.
Notes to Consolidated Financial Statements
June 30, 2010 and 2009
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash, accounts
receivable, and research and development receivables.
Cash and cash equivalents are deposited in various financial institutions, which may be in excess of insurance limits.
Accounts receivables are due from a limited group of customers. At June 30, 2010, one individual customer represented 100% of the
outstanding balance.
Advertising and Marketing Costs
The Company expenses advertising and marketing costs in the period incurred. Advertising and marketing expenses of $419,360 and $250,729
were incurred for the years ended June 30, 2010 and 2009, respectively.
Employee benefits
a) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have
no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognized as a
personnel expense in profit or loss when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a
reduction in future payments is available. The Company incurred $80,405 and $60,077 of expense under its defined contribution plans for the
years ended June 30, 2010 and 2009, respectively.
b) Long-term employee benefits
The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for
their service in the current and prior periods plus related on-costs; that benefit is discounted to determine its present value, and the fair value of
any related assets is deducted. The discount rate is the yield at the reporting date on Commonwealth Government bonds that have maturity dates
approximating the terms of the Company’s obligations.
c) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is
recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Valuation of Long-Lived Assets
Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future
net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying
values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference
between the carrying values of the assets and their estimated fair values. Impairment of long-lived assets is assessed at the lowest levels for
which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires the
Company to use estimates of future cash flows. However, actual cash flows may differ from the estimated future cash flows used in these
impairment tests. As of June 30, 2010, management does not believe any of the Company’s assets were impaired.
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