FAR SUMMARY NOTES

OLD NEW
CONCEPTUAL FRAMEWORK Keywords “Accounting “Financial
a. “concepts” used in PREPARATION of FS for External Users reporting”
b. PFRS prevails over conceptual framework
Presentation Enhancing
c. concerned w/ General purpose FS only
Comparability Verifiability
Understandability Comparability
Purpose of Conceptual Framework Understandability
1. ASSIST FRSC in developing PFRS and the review and adoption of IFRS Timeliness
2. ASSIST preparers of FS in applying PFRS Content Relevance :
3. ASSIST Auditors in forming an opinion if the FS complies with PFRS Relevance: Predictive
4. ASSIST users in interpreting the FS Timeliness Confirmatory
Qualitative Feedback Value Value
5. Provide interested parties w/ information about PFRS by FRSC
Characteristics Faithful
Reliability: Representation :
Objective of Conceptual Framework Faithful FREEdom from
Provide financial information about reporting entity to existing and Representation error
potential investors, lenders and other creditors Substance over COmpleteness
form NEutrality
Users of Financial Information Prudence
Neutrality
PRIMARY: Existing and potential investors, lenders and other creditors
Completeness
OTHER USERS: Employees, customers, Government and other agencies
Basic Accounting Process
Analyzing: A = L + E; source docs
Recording: Dr vs. Cr; Journals “Journalizing” Orig. Entry
Classifying: T accounts; Ledgers “Posting” Final Entry
Summarizing: Trial Balance
Interpreting: FS Analysis
Statement of Financial Position and Notes to FS Statement of Comprehensive Income and Accounting Changes

Capital concepts Accounting Changes

1. Estimate – currently and prospectively
Financial – Most common (financial assets are measured at fair value, (receivables, useful life, residual value, warranties)
PPE is measured in historical cost)
Physical - Uses current cost basis (Fair value) 2. Policy – retrospectively (standard or voluntary)
(inventory costing method)
Order of presenting the notes
1. Statement of compliance with PFRS NCA HELD FOR SALE
2. Summary of significant accounting policies Initial: Lower bet. CV (@date of classification) and FV - CTS
3. Supporting information or computation of line items Impairment Loss (P/L): FV-CTS < CV
4. Other disclosures Subsequent depreciation after classification = (no dep’n)
Subsequent ↑ in FV-CTS: Gain in P/L, but not to exceed impairment loss
Events after reporting period – occur between the end of the reporting previously recognized
period and the date the FS are authorized for issue.
OPERATING SEGMENTS
1. Adjusting Events – Exist at the end of the reporting period (adjust) 10% CRITERIA
a. Resolution of a court case after the reporting period which confirms a 1. Revenue Test: internal & external
present obligation 2. P/L Test: Higher between P & L (absolute amt.)
b. Bankruptcy of a customer 3. Asset Test: combined asset of all segments
c. Sale of inventories
d. Profit Sharing 75% CRITERIA
e. Discoveries of fraud or errors 75% External Revenue of reportable segments ≥ Consolidated revenue

2. Non-adjusting Events – Indicative of conditions that arise after the CASH AND CASH EQUIVALENTS
end of the reporting period (disclosed) Components of Cash:
a. Business combination after reporting period 1. Undeposited Currency and coins
b. Plan to discontinue the operation 2. Petty Cash
c. Major purchase/disposal of an asset by Gov’t 3. Demand Deposit
4. Undeposited Negotiable Checks
Related Parties 5. Foreign Currency
6. Bank Drafts
1. Control (more than 50%) – Parent/Subsidiary 7. Money orders
2. Significant influence (20%-50%) Associate 8. Other short term funds for CURRENT OPERATIONS
3. Ventures in a Joint Venture 9. Traveler’s Check
4. Key management personnel 10. Cashier’s Check
5. Close family members (spouse, child, dependents)
**Bank Overdraft* presented as LIABILITY, if repayable on DEMAND, will
be part of Cash Equivalent Outstanding Checks:
Outstanding Checks – recorded by the deposited as cash OC, beg xx
disbursements but not yet reflected in bank statement Add: checks issued by depositor
Certified Checks: deducted to outstanding checks Book Credits xx
DM, last month (xx) xx
Compensating Balance Unrestricted = Cash Less: checks paid by bank
Restricted Short Term – CA Book Debits xx
Long Term – NCA DM, this month (xx) xx
Undelivered Check – drawn and recorded but not given to payee – OC, End xx
added back to cash
Deposit in Transit:
Stale Check – check not encashed by the payee for a long period of DIT, beg xx
time – added back to cash balance Add: deposits received
Book debits xx
Post dated Check – check drawn and recorded by it bears a date CM, last month (xx) xx
subsequent to end of reporting period – added back to cash balance Less: checks received
Book Credits xx
BANK RECONCILIATION CM, this month (xx) xx
DIT, End xx
Unadjusted BANK balance xx xx Unadjusted BOOK balance AR xx
Undeposited Collection(DIT) xx xx Credit Memo ACCOUNTS RECEIVABLE
-Allow. for BD (xx)
Outstanding Checks (xx) (xx) Debit Memo Initial: FV or original invoice (net of S.Disc., S.Ret. & Allow.)
-Allow. for SR (xx)
Bank Errors xx/(xx) xx/(xx) Book Errors Subsequent: NRV -Allow. for SD (xx)
Correct Balance xx xx Methods for accounting for bad debts: NRV xx
xx(xx) Over/Short 1. Allowance method – Doubtful only
DAE xx
xx Adjusted Balance ADA xx

Petty Cash Fund 2. Direct Write-off method – Worthless/already uncollectible

Accountability Accounted for BDE xx
Imprest balance of PCF xx xx Currency and Coins AR xx
Undeposited Collections xx xx Undeposited collections – checks
Unclaimed Salaries xx xx Paid vouchers Allowance Method Direct Write off Method
Doubtful DAE xx NO ENTRY
Excess of advanced travel xx xx IOUs
ADA xx
Employee contributions xx xx Accomodation check
Worthless ADA xx BDE xx
xx Employee contributions(closed) AR xx AR xx
Recovery Cash xx Cash xx
Accountability xx
AR xx BDE xx
Accounted for (xx)
Shortage/Over xx
METHODS OF ESTIMATING DOUBTFUL ACCOUNTS NOTES RECEIVABLE
Initial: PV Initial Amount Recognized xx
1. Aging Method Req. Allowance Subsequent: Amortized Cost - Principal Collection (xx)
± Amort Disc/Prem xx/(xx)
2. % of AR Method
- Imp. Loss (xx)
3. % of SALES Method – DAE Expense Initial Amt < Principal Amt: Disc +
Amortized Cost xx
Allowance for Doubtful Accounts Initial Amt > Principal Amt: Prem –
(ADA) ICV FV
Beg. Balance
W/Off BDE NON-INTEREST BEARING NOTE
Recovery DP xx Installment – Periodic Collection × PV of O
PV of Note xx Lump Sum – FV × PV of 1
End Balance
SP xx

AR – Trade Face xx
-PV of note (xx)
Beg. Balance Collections
Disc on N/R xx
CR Sales SRA
Dishonored Notes S. Disc
Int. Income: CV of note ×eff %
Recovery W/Off
SD Lost Settlement in notes AC/CV of note
Factored Accts. a. Face xx b. PV xx
Recovery not included in coll. Disc (xx) Amort.of Disc (xx)
End Balance AC/CV xx AC/CV xx

LOANS RECEIVABLE Face Value xx

Initial: FV + TC directly attributable to acquisition +DOC xx
Subsequent: Amort. Cost (using eff.method) -Orig Fees (xx)
Direct Orig.Cost offset directly against OF received ICV of LR xx

Receivable Shortcut Gross AR, end xx

Amort. Cost: ICV × I.ER% - Interest -Allowances (xx)
-Provisions (xx)
Int. Income: ICV × ER%
LR @ AC xx
CV of Receivables xx
-PV of F.CF/restructured receivables (xx)
Impairment Loss xx
RECEIVABLE FINANCING Freight collect – Freight charge on goods shipped NOT YET PAID
Pledging (Borrowing) – disclosed in Notes to FS; general (pd. by BUYER)
Assignment (Borrowing) – formal type of pledging; specific Freight prepaid – Freight charge on goods shipped ALREADY pd by SELLER
Factoring (Borrowing/Sale) – AR
-Transfers ownership of AR to the factor Goods out on consignment INCLUDED and Goods HELD are EXCLUDED
-Factor assumes responsibility for uncollectible accounts Cash Discount: RECORDED, encourage prompt payment
Trade Discount: NOT RECORDED, encourage trading
-w/o recourse; notification basis
Discounting (Borrowing/Sale) – NR
Inventories shall be valued at lower of cost or NRV
-w/recourse (silent) – endorser shall pay endorsee if maker dishonours (NRV = ESTIMATED Selling Price – Cost to complete – Cost of Disposal)
note Cost of Inventory
-w/o recourse – endorser avoids future liability Included: Purchase Price, Import Duties, Irrecoverable taxes, Freight, Handling Cost &
other directly attributable to the acquisition
SP (Proceeds + receivable from factor) xx Deducted: Discounts, rebates & other similar items
Factoring as continuing agreement
- CV of AR (AR-AII) (xx)
FV of AR xx
Loss on Factoring NR xx COST FLOW METHODS
-Service Fee/Commission (xx)
FIFO /Periodic: (# of inventory on hand × Cost of latest purchase)
-Int. Charges (xx) Service Fee/Commission xx AVE/Periodic (Weighted Ave.): (# of inventory on hand × WA unit cost)
-Factor’s HB (xx) Int. Charges xx
WA unit cost: COGAS/# GAS
Proceeds from Factoring xx Factor’s HB xx
AVE/Perpetual: average cost is recomputed every purchase
Proceeds from factoring xx
transaction

INVENTORY
NRV
*Ownership determines inclusion/exclusion
FG/MI = Est. SP – Est. CTS
Shipping Terms Owner
WIP = Est.SP – Est. CTC – Est. CTS
FOB Shipping Terms
FOB Seller RM & Supplies = Current replacement cost
Buyer
FOB CIF
FOB FAS GROSS PROFIT METHOD

FOB destination Base on Sales Base on Cost

FOB buyer Seller Net Sales xx Net Sales xx
FOB ex-ship × (100%-GPR) x% ÷ (100% + GPR) x%
CGS xx CGS xx
Term of Sale Owner
Bill and hold arrangement
Sale on instalment Buyer
Special order

Lay-away sale
Sale on approval Seller
Sale with buy back agreement
RETAIL METHOD BIOLOGICAL ASSETS/AGRI PRODUCE

Cost Retail Bio Asset

Beginning inventory Add Add – living plants & animals
Purchases Add Add – measured @ FVLC of Disposal
Freight-in Add -
Add Agricultural Produce
Purchase Return Deduct
– harvested product of Bio Asset
Purchase Discount Deduct -
– measured @ FVLC of Disposal @ the point of harvest
Purchase Allowance Deduct -
*attached = Bio Asset
Department Transfer IN Add Add
*harvested = Inventory
Department Transfer
OUT Deduct Deduct
Animals (Recreational) PPE
Abnormal losses Deduct Deduct
Bearer Animals – Bio Assets
Mark up - Add
Bearer Plants – PPE
Mark up Cancel - Deduct
Mark down - Deduct G/L
Mark down cancel - Add  FV due to Price Change (Same age doff dates)
TGAS TGAS  FV due to Physical Change (Update age, same date)

INVESTMENTS
TGAS @cost = Cost Ratio AVERAGE METHOD
TGAS@retail PAS 39 PFRS 9 FVPL FVOCI
HFT HTM @ FVTPL Trans. Cost EXP CAP
TGAS@cost – Beg. Inv = Cost Ratio FIFO METHOD
AFS FA@FVTOCI Dividend Inc Inc
TGAS@retail – Beg. Inv
HTM FA@AC SH NI/L - -
CV @ BS Date FV FV
UG/L Δ in FV P/L OCI
UG/L SHE x ✓
G/L on Sale - P/L ✓ x

Effective Interest Method:

Interest Received = FA × Nominal Rate
Interest Income = CA @ Beg × Effective Rate
Diff. bet IR and II = Discount or Premium
Discount Amortization ↑ Carrying Amount
Premium Amortization ↓ Carrying Amount
**Amount of Amortization is increasing whether Disc/Prem.
Investment in Associate BOND INVESTMENT
DIAC DIFVPL DIFVOCI
Ownership: 20 – 50%
Held for collection Trading/
Assumption: w/ significant influence Business
of principal & Irrevocable
Held for collection of
Impairment Loss: CA > RA Model principal & interest & to Sell
interest choice
Recoverable Amt.:
Initial Purch. Price
FV - CTS
H VIU
Measurement Purch Price + Trans
Cost
Trans Cost =
Expense Purch Price + Trans Cost

AC using eff. int. FV: 1.Adjust to AC 2. Adjust

Subsequent method FV to FV
Cost Equity FV
to OCI NONE NONE Δ FV/UG/L
Trans. Cost Capitalized Capitalized Expensed Interest
Dividend Increase ↓ CV Increase Interest income: income: Interest income:
Impairment Test ✓ ✓ X Eff int x AC Nominal x FV Eff int x AC
to P/L Unr. G/L due to Upon derecog. transfer the
Impairment Loss FV - CTS < Cost -
G/L on derecog Δ FV balance cum. bal to P/L
CV @ BS Date Cost – IL CV - IL FV
Impairment
UG/L (Δ in FV) - - P/L Impairment Loss Loss Impairment Loss

Investment in Assoc Share in NI xx INVESTMENT PROPERTY

+Amort. xx  Land or Bldg. held for rentals/ capital appreciation or BOTH
Beg.Bal Dividend
Investment Income xx  Land held for undetermined use, Bldg. under construction for use
ShNI ShNL
+Cost/CA xx as investment ppty.
SOCL SOCL
-Div Received (xx)  Land and Bldg. leased by parent to subsidiary under operating
Amort. Of Excess
CA – TY xx lease. Investment ppty for separate FS, PPE for consolidated FS
EB(CV)  Cost model – Subject to depreciation
 FV model – No depreciation but any changes in FV are included
in P/L
Cost Cost DILUTION (w/SI) ↓%
-FVNA -BVNA Share in Proceeds (Updated % × proceeds from sale) xx When FV method is used
GW Excess cost - CV of Inv. sold (diluted/orig ×CV of interest) xx
Transfer from PPE – Investment ppty. – Any difference arising between the carrying
↑↓ CV of Investment or G/L on dissolution xx
- Share in O/U amount at that date and the FV is treated as Revaluation Surplus or Impairment Loss
+ Realization on OCI xx
GW
Total G/L on dilution xx
When Cost Method is used
Transfer into and out of Investment property be at CV. No gain/Loss recorded on
Investment in Associate in stages
reclassification, except if there is an indication of impairment loss.
Acq. Cost xx
+ShNI xx ShNI xx FV of old interest xx
+excess of FV xx +cost of new int. xx
+excess FV xx
-amort. of excess cost (xx) total cost of new inv xx
-amort of excess cost (xx)
-CA of NA acq. (xx)
-ShNL (xx) Investment Income xx
excess of cost xx
-Cash Dividend (xx)
CA – TY xx
DERIVATIVES Government Grant
Characteristics: Grant related to income – matched with future cost. If the cost is
 Underlying/notional already incurred, the grant is outright income
 No/ small payment Grant related to depreciable asset – over the life of the asset and in
 Future date Net settlement proportion to depreciation
Repayment of grant is recognized as loss to the extent of the excess
Measurement: payment over the balance of deferred income
 FV
 Δ in FV (recognize), CF Hedge(OCI) Borrowing Cost
Capitalize – construction/development of qualifying asset
PROPERTY PLANT and EQUIPMENT a. Specific: Actual interest incurred during construction period MINUS
interest income on temporary investment of the borrowing
1. Single Cost b. General: WA expenditures times average interest rate = capitalizable
a. Usable – FV interest but cannot exceed actual interest incurred. Interest income on
Single Land Based on investment of GB is IGNORED. If expenditures are incurred evenly during
Cost Building their FV the year, average capital is equal expenditure divided by 2
b. Not Usable
Actual BC
Single Cost – Land
2. Old Bldg – demolished immediately to construct a new building
L Wtd Ave. BC
ALLOCATED COST
a. Loss, if new building is PPE/IP DEPRECIATION
b. Capitalized as cost of new bldg if the new bldg is classified as such Methods:
c. Demolition Cost – if a new bldg is constructed -> Capitalized as cost 1. Uniform/Fixed:
of New Bldg; if not -> cost of land Straight Line: Depreciable Cost/Useful Life
PROPERTY TAX OPTION Group/Composite Method: Total Depreciable Amount
a. UPTO Acquisition – capitalized a. IF acquired – capitalized Total Annual Depreciation
b. AFTER Acquisition – expensed b. NOT acquired – outright expense Composite Rate: Total Annual Depreciation
DISMANTLING COST – PV; capitalized Total Cost
Depreciation: Total Cost ×Composite %
PPE
On account: invoice – disc whether taken 2. Variable
On instalment: Cash price/PV of payments Working hours: Depreciable cost/Life in terms of WH × AH used
Issuance of shares: FV of asset, FV of shares Output Method: Depreciable cost/ Life in terms of total output × AO
Exchange with commercial substance:
FV of asset given up + cash payment – cash 3. Diminishing
received SYD: Depreciable cost × SYD Rate L (L+ 1)
Exchange w/o commercial substance: 2
CA of asset given + cash payment – cash Declining balance: cost × DBrate 1÷L (consider RV only at last year)
received; no G/L Double Dec. balance: cost × DBrate (1÷L)×2 (IGNORE RV)
4. Inventory Method: Beg tools + Purchases – End tools – Proceeds
DEPLETION INTANGIBLE ASSETS
Depletable Amount = Acquisition Cost + exploration cost, development 1. R & D
cost and PV of estimated restoration cost – land value or RV  B efore commercial production
 Research Phase – Expensed
Total depletion during the year – Total production × depletion rate/unit  Development Phase – Expensed
Depletion included in COS – Units sold × depletion rate/unit (Development Cost – CAPITALIZED @ Technical Feasibility)
2. Patent – Over shorter between legal life of 20 years
Depreciation of Mining Property 3. Trademark - not amortized but tested for impairment at least annually
 Tangible – recognize as separate asset 4. Goodwill – not amortized but tested for impairment at least annually
 Useful life > Life of Wasting asset used Output Method  Organization cost – Expense
 Useful life < Life of wasting asset used SL method  IA with FINITE life – subject to amortization and tested for impairment
 If mining equipment is movable/usable = SL method when there is an indication
 IA with INDIFINITE life – NOT amortized, tested for impairment annually
IMPAIRMENT OF ASSET
1. CA > RA LIABILITIES
CONTINGENT ASSET CONTINGENT LIABILITY
2. Recoverable amount 1. VIRTUALLY CERTAIN – becomes asset 1. PROBABLE & MEASURABLE –
; Income Provision
FV-COD
2. PROBABLE – Disclosed 2. Outcome of Future event – Actual
H 3. REASONABLY POSSIBLE & REMOTE – Liability
VIU: PV of NCF no accrual/no disclosure
Reasonably Possible – Disclosed
Remote – No Accrual/No disclosure
3. Cash Gen. unit
a. CA > RA
Estimated Liability
b. Imp Loss -> allocate 1.GW 2.Other Asset
Premium Expense Premium Liability
c. Assets – should not be reduced below the highest of the ff: 1. FV – Cost of Premium Total Coupons Available
COD 2.VIU 3.0 - Remittance Received - # of coupons redeemed
Premium Cost Total Remaining Coupons
× Premium cost
4. Subsequent increase in RA
Sales Est. Premium Liability
Recovery -> Gain × %
Limit -> CA as if no impairment recognized Total Coup. Available
× Premium Cost
Premium Expense

Loyalty Property
Sales xx S₱ ( S/T × S₱) xx
LP- ₱ xx L-Pts (LP₱/T × S₱) xx
Total xx Total Sales xx

Pts. Redeemed × L-Pts = Revenue from Pts

Available pts + Sales from products
Total sales revenue
 DEBT RESTRUCTURING
Warranty Lawsuit
Warranty Expense: (% of sale until Prosper ASSET SWAP
end)×Sales
Probability
a. CV of liability xx IFRS:
Warranty Liability: Dismiss Total CV of Liability xx
- FV of asset given up (xx)
Warranty Expense -CV of asset given up (xx)
-Warranty Paid *value of provision × risk factor × PV GAIN SETTLEMENT xx
G/L on extinguishment of debt xx
Est. Warranty Liability
b. FV of asset given up xx
- CV of asset given up (xx)
BONDS PAYABLE G/L on DISPOSAL xx
Bond Issue Cost – includes promotion cost, engraving and printing cost,
underwriter commission, legal fees and accountant fees. EQUITY SWAP – debtor will issue capital to creditor
- Added to discount on bonds payable or deducted Measurement of Share capital: 1. FV of shares 2. FV of liability 3. CV of Liability
from premium on bonds payable a. CV of Liability xx b. FV of shares issued xx
- FV of Share issued/ FV of liab (xx) Par value of shares issued (xx)
Interest expense = CV × Effective rate % G/L on SETTLEMENT xx Share Premium xx
Interest income = FV × nominate rate %
*amortization of discount increases interest expense and CV of bonds
MODIFICATION OF TERMS
*amortization of premium decreases interest expense and CV of bonds
If G/L on extinguishment is 10%
Issue cost of Bonds (#of bonds × FV) xx CV of liability (Total old liab) xx of the old liability, the
CA- Bonds modification is not an
Bond issue cost xx -PV of FCO (ER%)(PV of new liab) (xx)
Int Exp (CA × ER) extinguishment and the gain or
Bond Premium/Disc xx G/L on Extinguishment xx loss is not recognized
Accrued interest xx Int Payable (FV × NR)
Bond Issuance-Net amt/ CA xx Carrying Amount

COMPOUND FINANCIAL INSTRUMENTS

Bonds payable issued with share warrants:
Total issue price of bonds payable with warrants
– MV of BP without warrants
Share premium or increase in equity
* If there is no market price/market
interest on bonds w/o warrants and
the MV of the warrants is given:
Total issue price of bonds
- MV of warrants
MV of bonds w/o warrants

Convertible bonds payable:

Total issue price of BP
- MV of BP w/o conversion privilege
Share Premium
FINANCE LEASE – LESSEE PV of Rental xx
PV of Purchase option xx PV of OLD rent xx
PV of NEW rent (xx)
a. Finance lease model for lessee – the lessee shall recognize right of INITIAL LEASE LIABILITY xx
Lease liab (extended LT) xx
use asset and lease liability +Initial DC xx
-Lease incentives received xx
* The cost of right of use asset includes the PV of lease payments or initial lease liability, lease +Lease bonus pd. to lessor (xx)
payments to lessor minus lease incentives received, initial direct cost and cost of dismantling or COST OF RIGHT OF USE OF ASSET xx
restoring asset as required by law or contract
FINANCE LEASE – LESSOR
*Leasehold improvement and executor costs are not included in cost of right of asset
Sales Type Direct Financing
and any refunded in cost of right of asset and any refundable security deposit is
Gross Investment Gross MLP + any gross same
accounted for as an asset of the lessee UGRV
RV – asset revert back to
*Initial lease liability includes the PV of the lease payments, payment option that is lessor
Net investment PV of MLP+ any PV of UGRV Cost of asset + IDC
reasonably curtained to be exercised, RV guarantee and termination penalty if the
Total financial rev./ UII Gross Inv. – Net investment Same
lease term reflects the exercise of termination option
Sales revenue FV of asset N/A
L
1. Installment Purchase – risk & rewards incidental to ownership -> lessee Net investment
2. Cost asset: COS Cost of asset + IDC N/A
FV of asset GP Sales – COS N/A
L Initial DC Expense -> COS Cost of asset -> net
investment
PV of MLP Lessor’s Asset Lease Receivable
3. Minimum Lease Payment (MLP) -Unearned Int. Income
a. Rentals Lessor’s Asset
b. Bargain Purchase Options – below FMV @ the end of lease term
c. Any GRV – asset will be taken by lessor w/ guarantee
4. Payment: interest + Principal Total Rentals Amortized as Rent income over
5. Initial Direct Cost = cost of asset the lease term
Lease Bonus Deferred Rent Income
6. Major Criteria
Amortized as Rent Income over
 Transfer of Title the lease term
 BPO Initial Direct Cost Deferred charges
 LT forms major part of useful life (75%) Amortized as expense over the
 PV of MLP (substantial part of PV of asset; 90%) lease term
7. Depreciation
 Transfer of title Unamortized IDC – incurred in CA
of leased asset
 75% or 90%: lower bet. Lease Term vs. Useful Life
Depreciation Over useful life
Any refundable security deposit Non -current liability
SALE & LEASEBACK EMPLOYEE BENEFIT COST
a. Right of USE ASSET = CA × Lease Liab
FV FV of Plan Asset PV of benefits obligation
b. Gain to be recognized Beg. Balance Benefits Paid Benefits PAID Beg. Balance
1. FV of asset xx Contribution Settlement Benefits SETTLED Interest Cost
- CA (xx) Actual Return Actuarial Gain Service Cost
Total Gain xx Acutarial Loss
End Balance (increase in PBO)
b. FV xx End Balance
-Rights retained (LL) by seller (Lessee) (xx)
Rights Transferred to Buyer (Lessor) xx Current cost
+ Past Service Cost Interest expense on PBO at beginning
Operating Lease G/L on plan settlement + Interest income on FV of plan assets at beginning
1. SP = FV 3. SP > FV Service Cost Net interest
 G/L recognized  excess of SP over FV
immediately *Def/Amort over lease term Service cost
 excess of FV over CA Employee benefit expense
+Net interest
*recognize immediately + Net remeasurement loss
+Interest on effect of asset ceiling
2. SP < FV 4. CA > FV: impairment loss - Net remeasurement gain
Employee benefit expense
 G/L recognized Defined benefit cost
immediately
 Loss – compensated by
below market rent DBC > contribution = Accrued benefit cost
*Def/Amort over lease term Contribution < DBC = Prepaid benefit cost

Finance Lease PBO> FVPA = accrued liability/pension liability

a. Gain – deferred & amortized over lease term FVPA<BPO = prepaid asset/pension asset
b. Loss – recognize immediately
DEFERRED INCOME TAX SHAREHOLDER’S EQUITY

Permanent Difference SHE = Issued share capital + subscribed share capital – subscription
a. NON-TAXABLE INCOME – div.received receivable + share premium + RE – treasury shares
b. NON-DEDUCTIBLE EXPENSE-Life ins. premium
Temporary Difference
a. TAXABLE TEMPORARY DIFFERENCE – gives rise to DTL FTA *if rights issued is offered to ALL existing shareholders
FTA × Tax % = DTL # of OSC outstanding before issue × FV/Share immediately before the exer. of rights
Theoretical ex-rights FV/share
Acctg income > Tax Income Theoretical Value
CA of Asset > Tax Base DTE xx 1. Mkt Price “right on” – exercise price
CA of Liab < Tax Base DTL xx # of SR to purchase/share

2. Mkt Price “ex-right – exercise price

b. DEDUCTIBLE TEMPORARY DIFFERENCE # of SR to purchase/Share
FDA × Tax % = DTA
Share based compensation
Acctg income < Tax Income
All options vested:
CA of Asset < Tax Base DTA xx Total options granted:
CA of Liab > Tax Base DTI xx [#options × (total #of employees – employees left – expected to
leave)]

Financial Income xx
Total Options Granted xx
+Non deductible EXP xx
Market Price × xx
- Non taxable EXP (xx)
Total Value of Option xx
Financial Income xx × Tax % = Total Tax Expense Divide by: vesting years xx
+ FDA xx Compensation Expense xx
- FTA (xx)
Taxable Income xx × Tax % = Current Tax Expense
Earnings per Share (EPS)
HYPERINFLATION NI – Pref.Shares Dividend
Monetary Assets – cash or any receivables in fixed amount of money EPS = WACSO
Monetary Liabilities – any payable in FIXED amount of money
Monetary items are not restated Cummulative – annual pref.share dividends is deducted from net income whether declared or
Non monetary items are restated. not
Noncummulative - annual pref.share dividends is deducted only when declared
index at year end × Historical cost = RESTATED AMOUNT
index at acquisition date

Income & Expenses Diluted EPS

P&L to common equity + after tax interest of convertible debt + Convertible Pref. Div
average index × Historical cost = RESTATED AMOUNT
Weighted Average # of common shares + All dilutive potential common stock
index at acquisition date
Book Value per Share (BPS) NON-COUNTERBALANCING ERROR
Year of incurrence Subsequent year
BPS = Total SHE NCB Error in an ASSET DIRECT NO EFFECT
# of OS Outstanding
NCB ERROR in a LIABILITY INDIRECT NO EFFECT
if with PS capital:
Where the requirements is the effect of errors in RE, beg (Jan 1 or RE
after closing)
T.SHE xx
1. Ignore all current period errors (CB and NCB)
-Liquidation value (xx)
2. Consider all Immediate Prior Year CB Errors
- Dividend in arrears (xx)
3. Consider all Prior Years Non-Counter Errors
Equity for OS Capital xx

Where the requirements is the effect of errors in RE, end (Dec. 31 or RE

after closing)
CORRECTION OF ERRORS
1. Consider all current period errors (CB and NCB)
2. Ignore all Immediate Prior Year CB Errors
Change in accounting estimate – Change in useful life, RV and
3. Consider all Prior Years Non-Counter Errors
depreciation method

Where the requirements is the effect of errors in Working Capital (current

Change in accounting policy- Change in inventory method, cost
assets – current liabilities)
recovery to percentage of completion, cost model to revaluation
1. Consider all errors affecting current assets and current liabilities as of
model, change to new policy as required by PRFS
the end of the reporting period only
2. The error in the Current Asset is DIRECTLY related to WC (overstated
Correction of errors
CA = overstated WC, vice versa)
Where the requirements is the effect of errors on NET INCOME:
3. The error in the Current Liability is INDIRECTLY related to WC
a. Consider all Current period error (Counter balancing or Non-C.B.)
(overstated CA = understated WC, vice versa)
b. Consider all immediately prior year counter balancing errors
c. Ignore all Prior year’s Non-counter balancing errors

COUTERBALANCING ERROR
Year of incurrence Subsequent year
CB Error in an ASSET
(prepayments,
Accrued income, DIRECT INDIRECT
Inventory end, AR,
Sales)
CB ERROR in a
LIABILITY
(Unearned Income, INDIRECT DIRECT
Accrued Expense, AP
and Purchases)

CASH TO ACCRUAL AND SINGLE ENTRY
Accounts Receivable/Notes
Receivable - Trade
Beg. Bal (AR/NR)
Sales on Account (Accrual basis)
Recovery of prev. w/offs
End Balance (AR/NR)
Advances to Suppliers
Beg. Balance (Adv.)
Payments (Cash Basis)
Purchase discounts
Purchase returns
Purchase allowance
End Balance (Adv.)
Accrued Income/Unearned Income
Beg. Balance Accrued Income
Recognize income (accrual basis)
End Balance (Accrued income)
Prepaid Expense/Accrued Expense
Beg. Balance Prepaid Expense
Payment of cash ( cash basis)
End Balance (Prepaid Expense)
Advances from Customers
Beg. Balance (Advances)
Collections (Cash Basis)
Sales Discounts
Sales Returns
Sales Allowances
Write Offs
End Balance (Advances)
Accounts Payable/Notes Payable -
Trade
Beg. Balance ( AP/NP)
Purchase on account (Accrual Basis)
End Balance (AP/NP)
Beg.Balance(Unearned Income)
Collection of cash (cash basis)
End Balance (Unearned income)
Beg.Balance(Accrued Expense)
Recognize of Expense (Accrual basis)
End Balance (Accrued Expense)
SME – entities that (per IASB):
Do not have public accountability
Publish general purpose FS for external users
Total Assets: 3M to 350M
Total Liabilities: 3M to 250M
 NOT required to file FS under listed entities whose shares are
TRADED in public market
 NOT in the process of filing FS
 NOT a holder of secondary value
 NOT a public utility
 DO NOT have public accountability
 Publish Gen purpose FS for external users
Micro business entities – TA or TL below 3M
They have the OPTION to use ANY
a. FULL PFRS
b. PFRS for SMEs
c. Other acceptable basis of accounting
EXEMPTIONS FROM PFRS FOR SMEs
1. S of a P company under FULL PFRS
2. S of a Foreign P. company that will be moving towards IFRS
3. S of a Foreign P. company applying standards for a NONPUBLICLY
accountable entity & is CONSIDERING moving to FULL PFRS instead of
PFRS for SMEs
4. Short term projections that it will breach the quantitative threshold & is
expected to be SIGNIFICANT (20% or more)
5. Part of a group (JV or Assoc.) reporting under FULL PFRS
6. Branch of a foreign entity under FULL PFRS
7. Has concrete plan to conduct an IPO w/in the next 2 years
8. Has a S that is mandated to report under FULL PFRS
9. Has been preparing FS using FULL PFRS and has decided to liquidate
its assets