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2019 ICREATE Notes To FS
2019 ICREATE Notes To FS
The accompanying financial statements for the years December 31, 2019 is authorized
for issue by the Board of Directors on May 29, 2020.
Basis of Preparation
The financial statements of the company have been prepared on the historical cost
basis and are presented in Philippine peso (Php), which is the company’s functional and
presentation currency.
Statement of Compliance
The financial statements of the company have been prepared in compliance with
Philippine Financial Reporting Standards (PFRS) for Small and Medium sized Entities
(SMEs) issued by the Financial Reporting Standards Council (FRSC), and adopted by
the SEC.
The principal accounting policies applied in the preparation of the financial statements
are the following, which have been applied consistently to all the years presented,
unless stated otherwise.
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand and in banks. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known amounts of
cash with original maturities of three months or less from the date of placement and that
are subject to an insignificant risk of change in value. Bank overdrafts, if any, are
shown within borrowings in current liabilities on the statement of financial position.
Termination Benefits
Termination benefits are payable when employment is terminated by the
company before the normal retirement date, or whenever an employee accepts
voluntary redundancy in exchange for these benefits. The company recognizes
termination benefit when it is demonstrably committed to either (A) terminating
the employment of current employees according to a detailed formal plan without
possibility of withdrawal; or (B) providing termination benefits as a result of an
offer made to encourage voluntary redundancy. Benefits falling due more than 12
months after the balance sheet date are discounted to present value.
Share Capital
Capital stock is recognized when the stock is paid for or subscribed under a binding
subscription agreement and is measured at par value.
Ordinary shares are classified as equity.
Equity instrument are measured at the fair value of the cash or other resources received
or receivable.
Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction from proceeds. The excess of proceeds from issuance of
shares over par value of shares are credited to share premium. If payment is deferred
and the time value of the money is material, the initial measurement is on a present
value system.
Where the company purchases its own shares (treasury shares), the consideration paid
including any directly attributable incremental costs is deducted from equity until the
shares are cancelled, reissued or disposed of. Where such shares are subsequently
sold or reissued, any consideration received, net of any direct attributable incremental
transaction costs and the related income tax effects, is included in equity.
Cumulative Earnings
Cumulative earnings include all current and prior period results as disclosed in the
statement of income.
Earnings per Share
Basic earnings per share is calculated by dividing the profit for the year attributable to
the common shareholders of the company by the weighted average number of common
shares outstanding during the year, after considering the retroactive effect of stock
dividend, if any.
Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will
flow to the Company and the revenue can be reliably measured. Revenue is measured
at the fair value of the consideration received, excluding discounts, rebates and sales
taxes.
Revenue on sales of goods is recognized when the goods are delivered and title has
passed.
Dividend Income, included under “Other income” in the statement of income and
retained earnings, is recognized when the right to receive payment is established.
Revenue comprises the fair value of the consideration received or receivable for the
sale of goods in the ordinary course of the activities. Revenue is shown net of
sales/value added tax, returns, rebates and discounts. It is recognized when persuasive
evidence exists, usually in the form of an executed sales agreement, that the significant
risks and rewards of ownership has been transferred to the buyer, recovery of the
consideration is probable, the associated costs and possible return of goods can be
estimated reliably, there is no continuing management involvement with the goods, and
the amount of the revenue can be measured reliably. If it is probable that discounts will
be granted and the amount can be measured reliably, then the discount is recognized
as a reduction of revenue as the sales are recognized.
Income Taxes
Current tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authority.
Current and Deferred Income Taxes
The tax expense for the period comprises current and deferred tax. Tax is recognized in
profit or loss, except that a change attributable to an item of income or expense
recognized as other comprehensive income is also recognized directly in other
comprehensive income.
Deferred income tax is recognized on temporary differences arising the tax bases of
assets and liabilities and their carrying amounts in the financial statements and on
unused tax losses or tax credits in the company.
Deferred income tax is determined using tax rates and laws that have been enacted or
substantively enacted by the reporting date.
Dividends Distribution
Dividend distribution to the company shareholders is recognized as liability in the
company’s financial statements in the period in which the dividends are approved by the
company’s shareholders.
Subsequent Events
Post year-end, adjusting events that provide additional information about the company’s
position at the reporting date are reflected in the company’s financial statements. Post
year-end, non-adjusting events are disclosed in the notes to the company’s financial
statements when material.
Input Taxes
Input tax represents the value-added tax (VAT) paid to suppliers that can be claimed as
credit against the entities’ output tax liabilities.
Estimates
In the application of the company’s accounting policies, management is required to
make judgments, estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual result may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognized in the period in which the estimate is
revised if the revision affects only that period or in the period of the revision and future
periods if the revisions affects both current and future periods.
The following represents a summary of the significant estimates and judgments and
related impact and associated risks in the company’s financial statements.
Estimating Property, Plant and Equipment’s Useful lives
The useful lives of property, plant and equipment are estimated based on the period
over which the assets are expected to be available for use. The estimated useful lives of
property, plant and equipment are reviewed periodically and are updated if expectations
differ from previous estimates due to physical wear and tear, technical or commercial
obsolescence and legal or other limits on the use of the company assets. In addition,
the estimation of the useful lives of property, plant and equipment is based on
company’s collective assessment of industry practice, internal technical evaluation and
experience with similar assets. It is possible, however, that future results of operations
could be materially affected by changes in estimates brought about by changes in
factors mentioned above. The amounts and timing of recorded expenses for any period
would be affected by changes in these factors and circumstances. A reduction in the
estimated useful lives of property, plant and equipment would increase the recognized
operating expenses and decrease non-current assets. The company uses the straight
line method of depreciation.
Asset Impairment
The company is required to perform an impairment review when certain impairment
indicators are present. Purchase accounting requires extensive use of accounting
estimates and judgment to allocate the purchase price to the fair market values of the
assets and liabilities purchased.
Determining the fair value o property, plant and equipment, investments and intangible
assets, which require the determination of future cash flows expected to be generated
from the continued use and ultimate disposition of such assets, requires the company to
make estimates and assumptions that can materially affect the financial statements.
Future events could cause the company to conclude that property, plant and equipment,
investments and intangible assets associated with an acquired business is impaired.
Any resulting impairment loss could have a material adverse impact on the financial
condition and results of operations.
The preparation of the estimated future cash flows involves significant judgment and
estimations. While the company believes that its assumptions are appropriate and
reasonable, significant changes in the assumptions may materially affect the
assessment of recoverable values and may lead to future additional impairment
charges.
The company has adopted the fair value approach in determining the carrying value of
its investment properties. While the company has opted to rely on independent
appraisers to determine the fair value of its investment properties such fair value was
determined based on recent prices of similar properties, with adjustments to reflect any
changes in economic conditions since the date of the transactions that occurred at
those prices. The amounts and timing of recorded changes in fair value for any period
would differ if the company made different judgments and estimates or utilized different
basis for determining fair value.
Deferred Tax Assets
The company reviews the carrying amount at each balance sheet date and reduces
deferred tax assets to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred tax assets to be utilized. However,
there is no assurance that the company will generate sufficient taxable profit to allow all
or part of its deferred tax assets to be utilized.
2019 2018
2019 2018
This account represent the current portion of a mortgage loan attached to the
acquisition of a motor vehicle with a term of three years and monthly
amortization
of P18,222.00. Current portion amounts to P218, 664.00.
The authorized share capital is Php 1,000,000 divide into 1,000 shares at PHP
100
par value. All shares are fully paid.
This account consists of: income receipts from various service engagements
totaling 14,051,426.47 and 14,120,378.21 for 2019 and 2018 respectively.
2019 2018
2019 2018
There are no pending tax assessment and RATE case as of December 31, 2019.