PAS 1 requires an entity to present the notes in a systematic manner.

Notes or
notes to the financial statements provides information in addition to those presented
in the other financial statements. It is an integral part of the financial statements.
These are normally structured as general information first, then statement of
compliance with PFRs and basis of preparation of financial statements, summary of
significant accounting policies, disaggregation, and disclosures. In connection with
this, based on our understanding of the past discussions, the following are observed
in the presentation of financial statements of Oceana Philippines International.

Disclosure of Measurement Basis

In accounting for the different accounts of Oceana Philippines International, the

company identified its initial recognition and subsequent recognition. Measurement
basis is the recognition on the amount of an account as to which it should be posted
in the financial statements.

The following are the accounts and its measurement applied by the company:

1. Cash – Measured at face value

2. Receivables – Initially measured at the transaction price plus transaction cost
and subsequently measured at amortized cost using the effective interest
method, less allowance for doubtful accounts.
3. Prepayments – Initially measured at cost and subsequently less the utilized
portion
4. Refundable deposits – Carried at cost, net of any accruing liabilities.
5. Property and equipment – Initially measured at cost and subsequently
measured at carrying amount, which is cost less accumulated depreciation.
6. Accounts and other payables – Recognized initially at transaction price and
subsequently measured at amortized cost using the effective interest method.
7. Head office account – Measured at proceeds received, net of bank charges
8. Expenses – Measured at face value
9. Leases – Recognize a right of use asset at fair value of the property

Disclosure of Accounting Policies

Accounting policies are the specific principles, bases, rules, and practices
applied by an entity in preparing and presenting financial statement. To account for a
transaction, the company applied consistently the accounting policies they followed.
They applied the PFRS for SMEs for each type of asset, liability, income, and expense.

The measurement basis of accounts are accounting policies that are also being applied
by the company.

Furthermore, the following are the accounting policies made by the company:

1. Cash - It includes cash on hand and demand deposits in banks

2. Receivables – Receivables are classified as current and non-current based on
PAS 1 on the definition of current and noncurrent assets. It follows the PFRS 9
 on accounting Receivables. The company includes advances to employees and
to suppliers to their receivables.
3. Prepayments – Recognized as an asset when paid and apportioned over the
period covered or when utilized. It also follows PAS 1 for the classification of
current and noncurrent. Prepayments includes healthcare subscription, airfare
and lodging accommodation, expenses paid in advance.
4. Refundable deposit – Recognizes security deposits paid that are refundable
upon expiration on the lease contract. Refundable deposit includes security
deposit for the Branch’s office rental.
5. Property and equipment – Follows PAS 16. The depreciation of property and
equipment is computed using the straight line basis. An item is derecognized
upon disposal and gains or losses are recognized in the statement of
comprehensive income. An the reporting date, the company reviews the assets
for impairment and any impairment loss is recognized in the statement of
comprehensive income PAS 36
6. Account and other payable – It follows PAS 1 in accounting for current and
noncurrent liabilities. Accounts and other payables include premium and loans
payable to SSS, HDMF, and PHIC and withholding tax payable.
7. Expense – Recognized in statement of comprehensive income when there is a
decrease in economic benefit. It is presented using the nature method.
Expenses includes the campaign expenses are incurred that consists of salaries
and wages, travel and transportation, meeting and conferences, advertising,
professional and consultancy fees, employee benefits, rentals, supplies,
communication, utilities, repairs and maintenance, bank charges, subscription
fees, postage and delivery, and taxes and licenses. However, general and
administrative expenses are expensed as incurred but cannot identified
specifically in reference but relate to several programs.
8. Leases – Accounted using PFRS 16. Operating lease are charged to statement of
comprehensive income over the period of the lease.
9. Current and deferred income tax – Tax expense comprises of current and
deferred tax. Accounted for using PAS 12. Current and deferred income tax had
no generating activities subjected to taxes in 2019 and 2018.
10. Related parties and related party transactions – Accounted for using PAS 24
11. Provisions and contingencies – Accounted for using PAS 37
12. Events after the reporting period – Accounted for using PAS 10.

Disclosures of Judgment

       In preparation of the financial statements of Oceana Philippines International,

the branch management listed the significant accounting judgments that were applied
in line with the accounting policies. Accounting judgments are accounting decisions
made by the management to be applied in their operations, assets, and their liabilities.

The significant accounting judgment are the following:

1. Functional currency
 The company determined that the functional currency to be used in their
operations is the Philippine Peso (₱). 
  Functional currency is the currency in which the entity’s cash inflows
and outflows are normally denominated into and is not necessarily the
currency of the country where the entity is based.
 PAS 21 requires an entity to determine and disclose its functional
currency where it operates.
 As can be seen from the financial statements, the company mainly
operates in the Philippines hence it was appropriate to use the Philippine
Peso
2. Transactions and Balances
 The company determined that in their transactions involved with foreign
currencies are denominated with the applicable exchange rate at the date
of transaction. Furthermore, outstanding monetary assets and liabilities
in foreign currency are retranslated using the applicable exchange rate at
the end of the reporting period.
 PAS 21 states that a foreign currency transaction is initially recognized
by translating the foreign currency amount into the functional currency
using the spot exchange rate. Moreover, monetary items at the end of the
reporting period are translated using the closing rate
 It can be concluded that the company also transact with foreign entities
and follows the accounting standards upon recognition
3. Operating Leases
 The office space and photocopier of the company were identified as
operating lease due to no transfer of substantial risks and benefits
incidental to ownership of the assets
 Under PAS 17, a lease is an operating lease if there is no transfer of
substantial risk and benefits of the asset
 The company’s asset are classified as operating lease and will revert back
to the owner at the end of the lease term.

Disclosures of Estimation/Estimates and Uncertainty

In relation with the accounts of Oceana Philippines International, the

management made certain estimates and assumptions regarding the circumstances of
certain accounts. Accounting estimates are decisions on account, transaction, or
event.

The following are relevant accounting estimates made by the company:

1. Estimating allowance for doubtful accounts on receivable

 The company maintains an allowance for doubtful accounts at a certain
level adequate to provide for potential accounts that are uncollectible. 
 The set-up of allowance for doubtful accounts is to present fairly the
accounts receivable in its net realizable value. Methods may vary
depending on the policy of the company
2. Estimating Useful lives of property and equipment
 The management determined the useful life of the asset based on the
period over which the asset is expected to be available for use. 
 Based on the company, the useful life of leasehold improvements is 2
years, computer equipment is 5 years, office and research equipment is 5
years, and furniture and fixtures for 5 years.