Jayden Receives Approval for Early Adoption of International Financial Reporting Standards
Vancouver, B.C., August 20, 2010; Jayden Resources Inc. (JDN:TSX-V, "Jayden" or "the Company") announces that its application for an exemption from the requirement under National Instrument 52-107 to prepare financial statements in accordance Canadian Generally Accepted Accounting Principles ("GAAP"), in order to facilitate early adoption by the Company of International Financial Reporting Standards ("IFRS"), has been approved by the British Columbia and Ontario Securities Commissions. The Company has chosen to adopt IFRS early and will commence reporting under these standards beginning January 1, 2010, with a January 1, 2007 date of transition (the "Transition Date"). Comparative periods for fiscal 2007, 2008 and 2009 will also be restated under IFRS.
In February 2008, the Canadian Accounting Standards Board confirmed that IFRS will replace existing Canadian GAAP ("GAAP") for all publicly accountable enterprises for financial periods beginning on and after January 1, 2011, with the option available for companies to early adopt upon receipt of approval from applicable Canadian Securities Administrators.
The Company currently has one subsidiary incorporated in British Columbia but may in the future incorporate or acquire subsidiaries abroad. Adoption of IFRS will generally permit the Company to apply a single accounting standard internationally. The Company expects that use of a single accounting standard will reduce costs and streamline financial reporting by developing common reporting systems and consistency across any future subsidiaries that it may establish abroad. In addition, the Company anticipates that its investors who are resident outside Canada in jurisdictions that already permit financial statement to be prepared in accordance IFRS will benefit from the Company's early adoption of IFRS.
IFRS Conversion
The Company's comprehensive IFRS conversion plan addresses changes in accounting policies, restatement of comparative periods, organization, internal controls and any required changes to business processes. To facilitate this process and ensure the full impact of the conversion is understood and managed reasonably, the Company engaged external consultants who are experienced in the IFRS conversion project. The accounting staff has also attended several training courses on the adoption and implementation of IFRS. Through in-depth training and the reconciliation of historical GAAP financial statements to IFRS, the Company believes that its accounting personnel have obtained a thorough understanding of IFRS.
The Company has reviewed its accounting system, its internal controls and its disclosure control processes and believes they do not need significant modification as a result of the conversion of IFRS.
The Company's application for early adoption of IFRS under National Instrument 52-107 was granted by the British Columbia and Ontario Securities Commissions on terms which included the requirement that if the Company files any interim financial statements prepared in accordance with Canadian GAAP for one or more periods in the year in which it adopts IFRS, the Company must, before it files its first financial statements prepared in accordance with IFRS, restate and re-file those interim financial statements in accordance with IFRS, together with the related restated interim management's discussion and analysis and the certificates required by National Instrument 52-109 – Certification of Disclosure in Issuers' Annual and Interim Filings. The Company intends to comply with this requirement.
Initial adoption of IFRS
IFRS 1 "First-time Adoption of International Financial Reporting Standards" sets forth guidance for the initial adoption of IFRS. Under IFRS 1, the standards are applied retroactively at the Transition Date with all adjustments to assets and liabilities taken to retained earnings unless certain exemptions are applied. The Company will be applying the following exemptions to its opening balance sheet dated January 1, 2009:
(a) Business combinations
IFRS 1 indicates that a first-time adopter may elect not to apply IFRS 3 Business Combinations retrospectively to business combinations that occurred before the date of transition to IFRS. The Company takes advantage of this election and applies IFRS 3 to business combinations that occurred on or after January 1, 2007. There is no adjustment required to the January 1, 2007's statement of financial position on the Transition Date.
(b) IFRS 2 - Share-based payment transactions
IFRS 2 Share-based Payment has not been applied to equity instruments that were granted on or before 7 November 2002, nor has it been applied to equity instruments granted after 7 November 2002 that vested before 1 January 2007.
(c) IAS 27 – Consolidated and Separate Financial Statements
In accordance with IFRS 1, if a company elects to apply IFRS 3 Business Combinations retrospectively, IAS 27 Consolidated and Separate Financial Statements must also be applied retrospectively. As the Company elected to apply IFRS 3 prospectively, the Company has also elected to apply IAS 27 prospectively.
(d) IAS 16 - Property, plant and equipment
IAS 16 Property, plant and equipment allows for property, plant and equipment to continue carried at cost less depreciation, which is the same as the treatment under GAAP.
Impact of IFRS
IFRS employs a conceptual framework that is similar to GAAP. The adoption of IFRS will have a material impact on the financial information previously disclosed under Canadian GAAP. The Company identified the following adjustments as a result of the adoption of IFRS:
(a) Acquisition of Assets
In April 2008, the Company purchased Tenajon Resources Corp.'s wholly-owned subsidiary, 0781639 B.C. Ltd. which held an undivided 40% ownership in the Kansas Claim and a 100% ownership interest in the Summit Lake property. Under IFRS, the deferred income tax liability that arose from this transaction, which was not a business combination, should not be recognized. GAAP requires the recognition of the deferred income tax liability and an adjustment to the carrying value of the asset purchased by the same amount.
As a result, during fiscal 2008, the Company reversed $925,000 of income tax liability recorded and decreased mineral properties for the corresponding amount.
(b) Investments
Under IFRS, all financial instruments categorized as available for sale are re-valued to fair value. GAAP implemented a requirement of fair valuation which was only effective for the financial years beginning after October 1, 2006.
During fiscal 2007, the Company recognized an unrealized gain on available-for-sale financial assets for the amount of $9,902.
(c) Share-based Payment Transactions
Under IFRS, share-based payment transactions which are subject to graded vesting should have the separate tranches valued and amortized over the respective vesting periods separately as if each tranche was a separate award. GAAP allows the entire award to be valued together and to be amortized on a straight line basis over the vesting time of the entire award.
As a result, in fiscal 2007 and 2008, the Company reduced share-based payment compensation by $73,487 and $9,308, respectively. During fiscal 2009, the Company recognized an additional $59 in share-based compensation.
(d) Flow-through shares
Flow-through shares are a unique Canadian income tax incentive which is the subject of specific guidance under GAAP and generally accepted accounting principles in the United States; however, there is no equivalent IFRS guidance. Therefore, the Company is currently reviewing proposed accounting policies to account for flow-through share transactions. One of such policies is to credit the premium paid for the flow-through shares in excess of the market value of the shares without the flow-through features at the time of issue to other liabilities and included in income at the time the qualifying expenditures are made. Given the lack of IFRS guidance on flow-through shares, the Company, in consultation with its external consultant, is still in the process of determining the amount of the flow-through share liability and the subsequent accounting of the flow-through share liability that should be recognized for fiscal 2007 under IFRS.
If the adjustments to flow-through share liability and the subsequent accounting of the flow-through share liability under IFRS cannot be confirmed in a manner that will permit the Company to timely file its financial statements prepared in accordance with IFRS for the interim period ended June 30, 2010, the Company intends to prepare the interim financial statements for the period ended June 30, 2010 in accordance with GAAP.
Different Terminology
In addition, the Company reclassifies the "Accumulated other comprehensive income" account into "Reserves – Available-for-sale financial assets" as certain terminologies are different under IFRS.
In order to allow the users of the financial statements to better understand other changes between IFRS and GAAP that do not have any quantitative effect or adjustments to the Company's financial statements, the following qualitative explanation of the differences between GAAP and IFRS is provided:
(a) Stock based compensation
GAAP – The fair value of stock-based awards with graded vesting are calculated as one grant and the resulting fair value is recognized on a straight-line basis over the vesting period. Forfeitures of awards are recognized as they occur.
IFRS – Each tranche of an award with different vesting dates is considered a separate grant for the calculation of fair value, and the resulting fair value is amortized over the vesting period of the respective tranches. In measuring the fair value of an award, forfeitures are estimated, and are revised for actual forfeitures in subsequent periods.
(b) Income tax
Income tax expense is calculated in the same manner in accordance with GAAP and IFRS. Future income tax asset/liability is also calculated in the same manner in accordance with GAAP and IFRS.
(c) Property, plant and equipment
GAAP and IFRS allow the use of original cost less depreciation as the cost base. IFRS requires separate depreciation rate for components that depreciate differently.
(d) Exploration for and Evaluation of Mineral Resources
GAAP and IFRS allow the capitalization of costs associated with the exploration for and evaluation of mineral resources.
For further information about Jayden and this news release contact Mike Thast at 604-688-9588 or visit Jayden's website at www.jaydenresources.com.
On Behalf of the Board:
"David Eaton"
Chief Executive Officer
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.