Updates in Philippine Accounting and Financial Reporting Standards 1

“Not intended for publication. For classroom instruction purposes only”.

Updates in Philippine Accounting and Financial Reporting Standards 2

Learning Activities

Name: _CHIN NIEVE S. FIGURA

Class Schedule: _MW 4:00 PM – 5:30 PM

Directions: Read and analyze the following activity and answer what is required. Submit
your work in the pigeon boxes which are provided in your department/college, or to
google class on or before the date as reflected in your study schedule. See Rubrics in
appendix. You may also access the rubrics in the classwork section in the google
classroom.

Activity 1
Maguindanao Computer, Inc., reports the following statement of financial position
amounts as of June 30,2020

Current asset P 2,440,500

Noncurrent assets 6,285,500
Current liabilities 1,386,000
Noncurrent liabilities 900,000
Owner’s equity 6,440,000

A review of account balances reveals the following data

a. An analysis of current assets discloses the following:

Cash P 422,500
Investment securities-trading 600,000
Trade accounts receivable 568,000
Inventories, including advertising 850,000
supplies of P20,000
2,440,500

b. Noncurrent assets include the following:

Property, plant and equipment:

Depreciated book value (cost P 6,560,000) 5,490,000
Deposit with a supplier for merchandise ordered for August 21,500
delivery
Goodwill recorded on the books to cancel losses incurred by 774,000
the company in prior years
6,285,500

c. Current liabilities include the following:

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Updates in Philippine Accounting and Financial Reporting Standards 3

Payroll payable P 71,500

Taxes payable 41,500
Rent payable 114,000
Trade accounts payable (net of 15,000, 6 months note, 999,000
received from a supplier who purchased some used
equipment on June 29,2020
Notes payable 160,000
1,386,000

d. Noncurrent liabilities include the following

9% mortgage on property, plant and equipment, payable P900,000

in semiannual installment of P90,000 through to June
30,2025

e. Owners’ equity includes the following:

Preference share capital;190,000 shares outstanding (20 P3,800,000
par value)
Ordinary share capital; 1,600,000 shares at P1 par value 1,600,000
Share premium 1,040,000
6,440,000

f. Ordinary shares were originally issued for P3,910,000, but the losses of the
company for the past years were charged against share premium.
Required:
a. Based on the above information, determine the adjusted amount of the following:

 Current assets
 Noncurrent assets
 Current liabilities
 Noncurrent liabilities
 Equity

b. Prepare a properly classified statement of financial position on December 31,

2020

“Not intended for publication. For classroom instruction purposes only”.

Updates in Philippine Accounting and Financial Reporting Standards 4

ANSWERS:

A. 1. CURRENT ASSETS
Current asset = P2440500 includes:
Cash P 422500
Investment securities- trading 600000
Trade accounts receivable 568000
Inventories + advertising supplies of P20K 850000
Trade accounts payable includes net of P15000 which is a 6 month note received from a
supplier who purchased some used equipment on 29.06.2020.
Notes receivable P15000 shown in the current assets side of the balance sheet.
Deposit with supplier for merchandise ordered for August delivery P21500
The deposit with supplier is the advance payment made to the goods which will order in
August month and it is treated as the asset receivable and shown in current assets side of
balance sheet.

* The advertising supplies is shown separately in the current assets since the supplies which are
still not utilized is also a current asset to the company.

Adjusted amount of current assets

= P2440500 + 15000 + 21500
= P2,477,000

Hence, adjusted amount of current assets = P2,477,000.

2. NONCURRENT ASSETS
Noncurrent asset = P6285500
Noncurrent asset includes 
Property, plant and equipment = P6560000
Depreciated book value = P5490000
Deposit with supplier for merchandise ordered for August delivery = P21500
The deposit with supplier is the advance payment made to the goods which will order in
August month and it is treated as the asset receivable and shown in current assets side of
balance sheet and deducted from noncurrent asset.
Goodwill recorded in books to cancel losses incurred by the company in prior years =
P774000
The goodwill is only created for the recognition of business running in the profitable
position and not to set off the losses.
The losses incurred should be shown in equity section of balance sheet and deducted
from the retained earnings (if any) or shown in the books to set off with future profits.

The goodwill amount should be deducted from noncurrent assets.

Adjusted noncurrent assets
= P6560000 - 21500 - 774000
= P5764500

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Updates in Philippine Accounting and Financial Reporting Standards 5

Hence, adjusted noncurrent assets = P5764500.

3. CURRENT LIABILITIES
Current liabilities P1386000, also includes:
Payroll payable = P71500
Taxes payable = P41500
3. Rent payable = P114000
Trade accounts payable includes net of P15000 which is a 6 month note received from a
supplier who purchased some used equipment on 29.06.2020. = P999000
Notes receivable = P15000 shown in the current assets side of the balance sheet and
should not be set off against the accounts payable.
Corrected accounts payable
= P999000 + 15000
= P1014000

Notes payable = P160000

Adjusted current liabilities

= P1386000 + 15000
= P1401000

Hence, adjusted current liabilities = P1401000.

4. NONCURRENT LIABILITIES

Mortgage Payable 900,000

Less: Noncurrent Portion 180,000
Adjusted Noncurrent liabilities P 720,000

5. EQUITY

Preference share capital;190,000 shares outstanding (20 par value) P 3,800,000

Ordinary share capital; 1,600,000 shares at P1 par value 1,600,000
Additional paid-in capital (P3,910,000-P1,600,000) 2,310,000
Deficit[(P2,310,000-P1,040,000) + P774,000] (2,044,000)
Adjusted Total Equity P 5,666,000

B.

Maguindanao Computer, Inc.

Statement of Financial Position
As of December 31, 2020

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Updates in Philippine Accounting and Financial Reporting Standards 6

Assets
Cash P 422,500
Investment securities-trading 600,000
Note receivable 15,000
Accounts receivable 568,000
Inventory 830,000
Advertising supplies 20,000
Deposit with supplier 21,500
Total current assets P 2,477,000

Fixed asset
Property, plant and equipment 6,560,000
Accumulated depreciation -1,070,000 5,490,000
Total assets P 7,967,000

Liabilities
Current liability
Notes payable P 160,000
Accounts payable 1,014,000
Mortgage payable 180,000
Payroll payable 71,500
Taxes payable 41,500
Rent payable 114,000
Total current liability P 1,581,000

Long-term liabilities
Mortgage payable 720,000
Total long-term liabilities 720,000

Shareholders’ equity
Preferred stock 3,800,000
Common stock 1,600,000
Additional paid in capital 2,310,000
Deficit -2,044,000
Total Shareholders’ equity 5,666,000
Total Liabilities and Shareholders’ P 7,967,000
equity

“Not intended for publication. For classroom instruction purposes only”.

Updates in Philippine Accounting and Financial Reporting Standards 7

Thank you for completing the task. If you have

not completed, or have difficulty in accomplishing the
activity, please send me a message to our google
class or you may ask clarifications through a text
message or phone calls on the contact number
included in your course guide.

And now, you are ready for the assessment.

“Not intended for publication. For classroom instruction purposes only”.