ACCA102 PREFINALS REVIEWER CHAPTER 13: “Related party disclosure”

CHAPTER 12: “Events after the reporting period”  Related party

- Subsequent events
- Events bw the end of reporting period & date
when they are authorized by issuance.
- May require either adjustment or disclosure
 Types:
1. Adjusting events
– provide evidence of conditions that exists at
the end of the reporting period
– Transactions that already exists before
Ex. (refer to page 290)
Explanation:
a. May obligation na before the reporting period
so may adjusting entries siya. Settlement
nangyari after nalang pero may mga
transactions na nangyari na before.
b. If may accounts receivables tayo ( ex. tayo yung
firm) kay customer, kailangan alamin natin, if
bankruptcy happened after reporting period
need adj entries kasi nag exists na siya before
reporting period kaya may receivables.
2. Non-adjusting entries
– no requirement to make adj entries, only a
disclosure
– indicative conditions that arrive after reporting
period
- Ability to control other party
- Exercise significant influence to other party
- Ability to have a joint control over reporting
entity
1. CONTROL
- Power to govern in terms of FINANCIAL and
OPERATING
- Power of entity to obtain benefits
- Subsidiaries / investments in affiliates
2. SIGNIFICANT INFLUENCE
- Ability to exercise significant influence
- Power to participate in the financial and
operating policy decision of an entity but not
control over those policies
- Might be gained by share ownership by 20% or
more tawag ay thresholders.
- Associates
= pero if 10% lang kunwari meron ka, may mga
ibang factors na pwede iconsider for u to have
significant influence:
a. Representation in BOD
b. Participation in policy making process
c. Material transactions bw investors and investee
d. Interchange of managerial personnel
e. Provision of essential technical personnel

 Financial statements authorized for issue

- Events of reporting period nangyari after end of
reporting period and on or before authorization
for issue of the FS.
Ex. FS is authorized March 1, events after
reporting period would be Jan 1 to March 1
then categorize if it’s adj or not.
+ FS are authorized when BOARD OF DIRECTORS
receives the FS and authorizes them for issue
3. JOINT CONTROL
- Joint venture = 2 or more businesses joins
together to pursue goal, may common goal sila
pero separate in legal terms and wants to
benefit from collaborative work
- Partnership = 2 or more common goal and share
same resources
EXAMPLES OF RELATED PARTIES

+ Entity is required to submit FS to shareholders for 1. Affiliates

approval after FS have been issued 2. Associates
3. Joint venturer
+ FS are authorized for issue ON THE DATE OF ISSUE BY
4. Key management personnel – may authority
THE BOD and NOT on the DATE OF SHAREHOLDERS
and responsibility for:
APPROVE FS.
a. Planning
b. Controlling activities of the entity
c. Directing
Key management personnel compensation: need ng
disclosure acc to PAS 24 par 16
S – short term employed benefits (salaries)
P – post employed benefits (retirement funds)
O – other long term benefits
T – termination benefits
S – share based payment transaction (share options)
5. Close family members of an individual –
expected to be influenced by the party
6. Postemployment Benefit plans – ex. mga retired
na sa adnu kasama pa rin sila sa medical plans,
pensions.
Related party transactions:
Transfer of resources or obligations bw related parties
whether may price charged.
Includes purchase of goods, rendering services, leases
and etc. bw related parties (like investors and investees)
+ if may transactions bw related parties, entity shall
disclose the nature of related party/relationship to
understand FS.
Related party disclosures – control exists, rs bw parents
and subsidiaries must be disclosed
Kaialan di required?
- If u are preparing separate FS u need to disclose
related party transactions PERO if u are making
or preparing consolidated FS of the group,
eliminate the related party transactions and
outstanding balances.
UNRELATED PARTIES
- If may 2 entities na may same management
personnel in common, di pa rin sila related
parties they only have common director.
- Providors of finance, trade unions, in course of
there public dealins, may transactions sa
agencies.
- 2 venturers na nag share joint ventures is not
rekated pero pag single venturers then yessir.
CHAPTER 32: “Noncurrent asset held for sale”
Acc to PFRS 5 = noncurrent asset is classified as held for
sale if carrying amount will be recovered principally
through a sale transaction rather than continuing use.
Ex. si building noncurrent para sa business gagamitin
noncurrent pero under pfrs 5 si building marerecover
through sale transaction di na to be used then NCA held
for sale na siya.
a. Held for sale
b. Discontinued operation
+ asset held for sale classification:
a. NCA / disposal group
b. Recovered through sale
+ conditions for HFS
a. Available at its present condition/ available for
immediate sale
b. Sale must be highly probable
- Management must be committed to a plan to
sell asset
- May program a to locate buyer
- Sale is expected to be completed within a year
- May price na reasonable
- Yung plan dapat di na mabago pa/ unlikely to
change
+ NCA HFS pwede na siya maging current asset ang
classification.
Measurement of asset HFS:
NCA HFS mamemeasure at a lower price bw the
carrying amount (total cost of asset – accumulated
dep) or fair value less cost of disposal
+ NCA HFS should not be depreciated!
 IMPAIRMENT LOSS
- Be treated as an expense.
- If fair value less cost of disposal is lower than
the carrying amount, then should be written
down.
Ex. si building carrying amount is 5M, but sa
market fair value is 4M, then written down
should be 4M, kaya difference ng carrying
amount and fair value = 1M be considered as
impairment loss.
 - If fair value ay mababa sa carrying amount
magkakaroon ng impairment loss.

NCA is not considered as HFS if it’s to be ABANDONED

kasi carrying amount can only be recovered principally
through continuing use or magagamit asset until it’s end
of economic life.

If TEMPORARILY ABANDONED, entity should not

account an asset if temporarily used lang as if it’s
abandoned. That is why di pa rin HFS kasi continuously
pa rin ang depreciation nila.

+ CHANGE IN CLASSIFICATION:

NCA will no longer be classified as HFS pag nagbago isip

na di na ibenta then:

- May remeasurement of NCA kung saan it

stopped and ceases to be classified as HFS at
LOWER bw carrying value/ amount of asset
bago HFS or recoverable amount of the day
napag decide-an di ibenta; lower bw the two
yan ang amount na/ measurement na.