DEFINITION OF TERMS

Separate FSs – are those presented by an entity in which the entity could elect, subject to the requirements in PAS
27, to account for its investments in subsidiaries, joint ventures and associates either at cost, in accordance with
PFRS 9 Financial Instruments, or using the equity method as described in PAS 28 Investment in Associates and Joint
Ventures

Combined FS – Financial statements of a reporting entity that comprises two or more entities that are not all linked
by a parent-subsidiary relationship.

Consolidated FS – The financial statements of a group in which assets, liabilities, equity, income, expenses and cash
flow of the parent and its subsidiaries are presented as those of a single economic entity.

- Financial statements of a reporting entity that comprises both the parent and its subsidiaries.

Separate FS – The entity could elect its investment in associate, joint venture, subsidiaries.

Does PAS 27 require an entity to present SFS? – NO

- Presented when an entity elects or required by local regulations.

Presented by an investor with control (subsidiary), significant influence (associate) or joint control (joint venture)
over an investee.

SEPARARE FS

choice of accounting methods:

NOT CLASSIFIED AS HELD FOR SALE

1. Cost Method – if none

2. Equity Method; or
3. Fair Value Method – if with public quotation price

CLASSIFIED AS HELD FOR SALE

1. Cost Method – to PRFS 5 (Lower of Carrying Value vs. Fair Value Cost to Sell)
2. Equity Method – to PFRS 5 (Lower of Carrying Value vs. Fair Value Cost to Sell)
3. Fair Value Method – PFRS 9 not changed

COST, EQUITY AND FAIR VALUE

COMPARISON COST (PAS 27) EQUITY (PAS 28) FAIR VALUE (PFRS 9
FVTPL)
Transaction Cost (DACs) YES (capitalizable) YES (capitalizable) NO (expense outright)
Dividends INCOME (Return ON) DEDUCTION (Return OF) INCOME (Return ON)
reported in P&L reported in BS, deduction reported in P&L
in investment
Share in Net Income N/A P&L N/A
(LOSS)
Share in Changes in OCI N/A OCI N/A
Component
Changes in Fair Value of N/A N/A P&L
Investment
Subject to Impairment YES YES NO (titignan lang kung
Review may changes in FV
increase or decrease)
Impairment Loss P&L P&L N/A
Under Cost Method na may effect sa P&L: Dividends and Impairment Loss
Under Equity Method na may effect sa P&L: Share in Net Income and Impairment Loss
Under Fair Value Method na may effect sa P&L: Transaction Cost and Changes in FV of Invesment
COST METHOD : T ACCOUNT

Beg. / Acquistion Cost xx xx Impairmentz

Reversal of Impairment Loss xx xx End.

Note: Under cost method, it will remain at cost unless impaired or with reversal with impairment.

FAIR VALUE METHOD : T ACCOUNT

Beg. Acquisition Cost xx xx Decrease in Fair Value

Increase in FV xx xx End.

Note: Under FV method, record all the changes in FV (unrealized gain or unrealized loss: presented in OCI)

EQUITY METHOD : T ACCOUNT

Beg. / Acquisition Cost xx xx Dividends

Share in Increase in OCI xx xx Share in Decrease in OCI
Share in Decrease in OCL xx xx Share in Increase in OCL
Share in Net Income/EIANI xx xx Share in Net Loss/EIANL
Reversal of Impairment Loss xx xx Impairment
xx End.

EIANI – Equity Interest of Associate

Acquisiton Cost: Yung nasa unang una na debit side ng investment meaning first year palang nya naginvest.
Beginning: Carry over ng ending balance ng last year.

Note: Under Equity Method, dividends are never income.

Which is broader? Investment Income or Dividend Income? Answer: Investment Income

Debt Securities (investment income in the form of interest income)
Equity Securities (investment income in the form of: it depends on the method used)
under Cost or FV method: Dividend Income
under Equity Method: Share in the Net income
1. Pakistan purchased 100% of the common stock of the Syria Company on January 1, 2021, for P1,000,000. On
that date, the stockholders’ equity of Syria Company was P760,000. On the purchase date, inventory of Syria
Company, which was sold during 2021, was understated by P40,000. Any remaining excess of cost over book
value is attributable to building with a 20-year life. The reported income and dividends paid by Syria Company
were as follows:

2021 2022
Net Income P160,000 P180,000
Dividends Paid P20,000 P20,000

Using the equity method, the Investment Income and Investment Account balance on December 31, 2022 is?