STATEMENT OF

FINANCIAL POSITION
PREPARED BY: VERONICA ANN P. BUGAY
DEFINITION

Formal statement
showing the three
elements comprising
financial position,
namely: assets,
liabilities and
equity.
ASSETS AND CURRENT ASSETS
 CASH AND CASH EQUIVALENTS

• Short-term, highly
liquid investments
that are readily
convertible into
known amount of
cash and which are
subject to an
INSIGNIFICANT RISK
of changes in value.
 POV: ISSUE (FUND) BUY
• BONDS ------------ BONDS CERTIFICATE –BONDHOLDER ©REDITOR
• INTEREST (FIXED)
• A COMPANY ISSUED BONDS (20YRS, 12% INTEREST ANNUM)
• INTEREST PAYABLE INTEREST INCOME
• BONDS PAYABLE (NCL) INV. IN BONDS(NCA)
• 19 yrs – 1 yr - CL

• SHARES – O.S. P.S. - ---------- SHAREHOLDER (OWNER)

• ENTITLED TO THE DIVIDENDS
• INCOME – DECLARE ------------ SHARE IN THE INCOME

•INTANGIBLE ASSETS
• PAS 38, intangible asset
must be controlled by
the entity as a result of
past event and from
which future economic
benefits are expected to
flow to the entity.
• LONG-TERM INVESTMENTS
– asset held by an entity for
the accretion of wealth
through capital distribution,
such as interest, royalties,
dividends and rentals, for
capital appreciations or for the
benefits to the investing entity
such as those obtained through
trading relationship.
Patent – invention (machine)

copyright – music, books (authorship)

trademark – slogan, logo

 LIABILITIES
Present obligation of an entity arising from past event, the
settlement of which is expected to result in an outflow
from the entity of resources embodying economic benefits.
 WHAT IS CURRENT LIABILITIES?

• Expects to settle within the normal operating cycle

• Hold liability primarily for the purpose of trading
•Due to be settled within twelve months after the
reporting period
•YEAR 2022 January 1, 2022 – Dec. 31, 2022 – Dec 31, 2023
• Entity does not have an unconditional right to defer settlement of liability
 Long-term Debt Currently Maturing – ncl - cl

Liability which is due to be settled within 12 months after the reporting

period is classified as current, even if:
• The original term was for period longer than 12 months
• An agreement to refinance or to reschedule payment on a long-term
basis is completed after the end of the reporting period and before
financial statements are authorized for issue.

• 2022 Jan - DEC 31, 2022 January 2, 2023 March 31, 2023 –
• ON OR BEFORE – NCL Refinance ------------------------- March 31, 2024
• AFTER – CL Jan 2, 2023 CL March 31, 2024
 COVENANTS
Covenants – attached to borrowing agreements which represent
undertakings by the borrower.
Current 2:1-----------1.8:1

CONDITION – BREACHED – Financial liability becomes?

PAYABLE ON DEMAND ------ GRACE PERIOD – ON OR BEFORE NCL
AFTER – CL
GRACE PERIOD -
 WORKING CAPITAL

Assets = Liabilities + Equity

Assets = Current + Non-current

Working Capital = Current Assets - Current Liabilities

 ESTIMATED LIABILITIES and CONTINGENT
LIABILITIES
ESTIMATED LIABILITIES - Obligations exist at the end of
reporting period although their amount is NOT definite.
Provision = both probable and measurable
CONTINGENT LIABILITIES – Possible obligations or
present obligations not recognized because:
a. Not probable (outflow of resources)
b. Cannot be measured reliably
 EQUITY
Residual interest in the assets of the entity after deducting all of the liabilities.
 RETAINED EARNINGS, REVALUATION SURPLUS

Retained Earnings - Cumulative balance of periodic net income or

loss, dividend distributions, prior period errors, changes in
accounting policy and other capital adjustments.
Revaluation Surplus – excess of sound value over carrying amount of
the revalued asset
Income statement – Nominal Account?

Nominal Account – revenues, expenses

Real accounts - assets

Income statement – Zero 2021 – 2022

5M should be 2021 -------- Income Summary – Retained Earnings
4M actual
INCOME STATEMENT –NOMINAL (TEMPORARY
ACCOUNTS) – 0 AT THE END YEAR

INCOME STATEMENT – 2021 --- ZERO ---- INCOME

SUMMARY --------- RETAINED EARNINGS (REAL – BS)

INCOME STATEMENT – 2021 ---

5M -------- SHOULD BE 4M ==== 1M ------
 RETAINED EARNINGS, REVALUATION SURPLUS

Retained Earnings - Cumulative balance of periodic net income or

loss, dividend distributions, prior period errors, changes in accounting
policy and other capital adjustments.
Revaluation Surplus – excess of sound value over carrying amount of
the revalued asset
 Cost Replacement Cost
Machinery 3,000,000 4,800,000
Accumulated 750,000 1,200,000
Depreciation
 Cost Replacement Cost

Machinery 3,000,000 4,800,000

Accumulated Depreciation 750,000 1,200,000

Cost 3,000,000 Replacement Cost 4,800,000

Accumulated Depreciation (750,000) Cost (3,000,000)
Carrying Amount/Book 2,250,000
Value Appreciation 1,800,000

Replacement Cost 4,800,000 Sound Value 3,600,000

Accumulated Depreciation (1,200,000) Carrying Amount 2,250,000

Dep. Replacement 3,600,000 Revaluation Surplus 1,350,000

Cost/Salvage Value
TREASURY SHARES
THE END