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MARAKAJ GASOLINE STATION

Poblacion, Mabini, Pangasinan
Notes to Financial Statements
December 31, 2020 and 2019

1. MARKAJ GASOLINE STATION INFORMATION

The company was organized under the laws of the Republic of the Philippines and duly registed with the
Department of Trade and Industry as MARAKAJ GASOLINE STATION, owned and managed by Mr. Martin
Joseph M. Rayos. The company is engaged in retailing auto lubricants and accessories.
The company's registered office address which is also the principal place of business is located at Poblacion
Mabini, Pangasinan

2. STATUS OF OPERATION
The accompanying financial statements have been prepared on a going concern basis, which contemplate the
realization of assets and settlement of liabilities in the normal course of business.

3. BASIS OF PREPARATION
Statement of Compliance
The accompanying financial statements have been prepared in accordance with Philippine Financial Reporting

Standards (PFRS) for Small Entities (SE’s) issued by the Philippine Financial Reporting Standards Council.
Basis of Measurement
The financial statements of the Company have been prepared on historical cost basis and they are presented in
Philippine Peso, which is the Company’s functional and presentation currency.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
Cash
Cash includes cash in bank that are unrestricted and available for current operations. This is stated in the
statement of financial position at face amount.
Inventories
Inventories are assets which are held for sale in the ordinary course of business, in the process of production
for such sale or in the form of materials or supplies to be consumed in the production process or in the
rendering of services. Inventories are valued at the lower of cost and net realizable value.
Inventories are stated at the lower of cost or market value (e.e., the probable selling price to willing buyers as
at the reporting date). Cost is determined using the first-in, first out (FIFO) method.

Other Current Asset

Other Current Assets are carried at face value, and include prepayments made to supplier and unused ofice
supplies.

Property and Equipment

Property and equipment are initially measured at its cost and subsequently measured at cost less any
accumulated depreciation/amortization and any accumulated impairment losses.
The initial cost of property and equipment comprises of its purchase price and any costs directly attributable to
bringing the asset to the location and condition necessary for it to be capable of operating in the manner
intended by management.
A part of some items of property and equipment may require replacement at regular interval. The entity
decides not to add to the carrying amount of an item of property and equipment the cost of replacing part of
such an item when that cost is incurred if the replacement part is expected not to provide incremental future
benefits to the entity.
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The entity derecognises an item of property and equipment on disposal, or when no future economic benefits
are expected from its use or disposal. The entity recognises the gain or loss on derecognition of an item of
property and equipment in profit or loss when the item is derecognised. The entity not classifies such gains as
revenue. The entity determines the gain or loss arising from derecognition of an item of property and
equipment as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

The Company assesses as at reporting date whether there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing for an asset is required, the Company makes an
estimate of the asset’s recoverable amount. An asset’s recoverable amount is calculated as the higher of the
asset’s or cash-generating unit’s fair value less costs to sell and its value in use or its net selling price and is
determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those assets or groups of assets. Where the carrying amount of an asset exceeds it recoverable
amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessment of the time value of money and the risks specific to the asset. Impairment
losses are recognized in the statements of income in those expense categories consistent with the function of
the impaired asset.
An assessment is made at each reporting date as to whether there is an indication that previously recognized
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable
amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in
the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized.
If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that would have been determined, net of depreciation and
amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized
in the statements of income unless the asset is carried at revalued amount, in which case the reversal is treated
as revaluation increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate
the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

Intangible Assets
Intangible assets are amortized on a straight-line basis over their estimated useful lives, which do not exceed
the contractual period, if any. The estimated useful lives, residual values, and amortization methods are
reviewed at each year end, and any changes in estimates are accounted for prospectively.

Trade and Other Payables

Trade payables pertain to accounts payable and other payables pertain to accruals. Trade and other payables
are initially measured at an invoice cost and subsequently measured at undiscounted amount of cash or other
considerations expected to be paid.
Income Tax Payable
The tax currently payable for the year is computed based on applicable tax rates based on existing tax laws.

Owner's Equity
Equity account pertains to the investment by the owner, plus additions earned through profitable operations
minus reductions of personal withdrawal by the owner.
Revenue recognition
Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow
to the Company and the amount of the revenue can be measured reliably.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods or services provided in the normal course of business.
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Cost and expense recognition

Expenses are decreases in economic benefits in the form of decreases in assets or incurrence of liabilities that
result in decreases in equity. Expenses are generally recognized when the services are received or when the
expenses are incurred.

Employee Benefits
Employee Benefits represents:
Short-term benefits
Short-term benefits given by the Company to its employees include salaries and wages, 13th month pay,
employer share contributions.

Income tax
Income tax expense includes current tax expense. The current tax expense is based on taxable profit for the
year.

5. CASH
Cash consists of cash on hand and cash deposited in local banks. These items are set aside for current purposes
and measure at face value.
2020 2019
Cash on hand 20,000.00 20,000.00
Cash in bank 1,210,533.00 238,823.00
Total 1,230,533.00 258,823.00

6. INVENTORIES
This account consists of:
2020 2019
Inventories 842,342.00 1,142,594.00
Total 842,342.00 1,142,594.00

7. OTHER CURRENT ASSETS

This account consists of:
2020 2019
Creditable Input Tax - 22,492.00
Total - 22,492.00

8. PROPERTY AND EQUIPMENT

Property and Equipment consist of the following:
December 31, Retirement / December 31,
Cost Addition
2019 (Disposal) 2020
Building 2,352,656.00 - 2,352,656.00
Service Vehicle (Garong) 94,000.00 - 94,000.00
Equipments: - - -
Dispensing Pump 600,000.00 - 600,000.00
Underground Tank 510,000.00 - 510,000.00
Genset 210,000.00 - 210,000.00
Office Equipment 102,749.00 - 102,749.00
3,869,405.00 - - 3,869,405.00
Less: Accumulated. Depreciation
Building 333,293.00 156,844.00 490,137.00
Service Vehicle (Garong) 26,633.00 18,800.00 45,433.00
Equipments: 403,112.00 173,550.00 576,662.00
763,038.00 349,194.00 - 1,112,232.00
Carrying Value 3,106,367.00 2,757,173.00
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Depreciation Expense 2020 2019

Building 156,844.00 235,265.00
Service Vehicle (Garong) 18,800.00 18,800.00
Equipments: 173,550.00 284,550.00
Total 349,194.00 538,615.00

Depreciation is computed on a straight line method over the estimated useful life of the assets.

9. INTANGIBLE ASSETS
This account consists of the following: 2020 2019
Franchise Fee 359,333.00 359,333.00
Total 359,333.00 359,333.00

10 TRADE AND OTHER PAYABLES

This account represents the following:
2020 2019
Trade Payable 6,569.00 11,522.00
Other Payables - Accrued Expenses 28,359.20 -
Income Tax Payable 7,308.80 12,103.00
Total 42,237.00 23,625.00
Trade and other payables are initially recorded at transaction price and subsequently measured at their costs
less settlement payments.

11. REVENUE AND COST RECOGNITION

2020 2019
SALES 15,520,313.00 20,936,907.00
Total 15,520,313.00 20,936,907.00

Revenue is recognized to the extent that is probable that the economic benefits will flow to the Company and
the amount of revenue can be reliably measured.

Cost of Sales 2020 2019

Merchandise Inventory, beg. 1,142,594.00 328,118.00
Purchases (Net) 13,689,031.00 19,016,508.00
Exempt Purchases - 39,046.00
Total Goods Available for Sales 14,831,625.00 19,383,672.00
Merchandise Inventory, end 842,342.00 1,142,594.00
Total 13,989,283.00 18,241,078.00

12. DISTRIBUTIVE COST

2020 2019
Depreciation 349,194.00 538,615.00
Fuel and oil 347.00 750.00
Repairs and Maintenance 7,432.00 96,876.00
Representation Expense 3,070.00 5,226.00
Salaries, Allo. & 13th month 678,407.00 1,346,935.00
Supplies 20,944.00 13,357.00
Transportation and Travel 895.00 4,860.00
Utilities 96,023.00 138,263.00
Total 1,156,312.00 2,144,882.00
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13. ADMINISTRATIVE EXPENSES

2020 2019
Communication, light and water - -
SSS, PHIC, Pag-ibig 53,987.00 137,918.00
Taxes and licenses 33,002.00 35,831.00
Total 86,989.00 173,749.00
Administrative expense are recognized in the statement of income on the date they are incurred.

14.
SUPPLEMENTARY TAX INFORMATION UNDER REVENUE REGULATION NO. 15-2010 AND 19-2011

On November 25, 2010, The Bureau of Internal Revenue (BIR) issued Revenue Regulation (RR) 15-2010, which
required certain information on taxes, duties and license fees paid or accrued during taxable year to be
disclosed as part of the notes to financial statements. This supplemental information, which is an addition to
the disclosures mandated under PFRS for SEs, is presented as follows:

(a) Output VAT Net

Output VAT
SALES
Taxable Revenue
Regular 15,520,313.00 1,862,437.56
Total 15,520,313.00 1,862,437.56

(b) Input VAT

Net Purchases Input Tax
Purchase of Capital Goods not exceeding P1Million 13,689,031.00 1,642,683.72
Total 13,689,031.00 1,642,683.72

Taxes and Licenses

This account consists of: 2020 2019
BIR - Annual Registration Fee 500.00 500.00
Business Permit 7,120.00 33,481.00
Bureau of Fire & Protection 1,220.00 -
Real Property Tax 24,162.00 -
Vehicle Registration - 1,850.00
Total 33,002.00 35,831.00