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Model NFS - Full PFRS (2022) - LENDING AND FINANCING
Model NFS - Full PFRS (2022) - LENDING AND FINANCING
1. CORPORATE INFORMATION
CORPORATION (the Company), a domestic corporation organized under the existing Philippine laws,
was duly registered with the Securities and Exchange Commission (SEC) on _____. It was granted the
right mainly to engage in___ (PURPOSE PER ART OF INC.).
Status of Operations
The Company incurred a net loss of ____ and ____ in 2022 and 2021, respectively, resulting to a
capital deficiency of ________ and _________ as of December 31, 2022 and 2021, respectively.
These conditions indicate the existence of a material uncertainty which may cast significant doubt about
the Company’s ability to continue as a going concern. The management and stockholders have no plan
to close or discontinue the operations of the Company. They have committed to provide full support to
the Company to sustain its operations and meet its working capital requirements and obligations as
they fall due in order for the Company to continue as a going concern. Also, the Company will continue
to focus on improving its collection strategies especially to those borrowers who are temporarily put on
hold their payment and continue to pursue its market to increase its revenues.
The financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts and the amounts and classification of liabilities that may be necessary
should the Company be unable to continue as a going concern.
2. BASIS OF PREPARATION
The financial statements of the Company have been prepared in accordance with Philippine Financial
Reporting Standards (PFRS) issued by the Financial Reporting Standards Council (FRSC) and adopted
by SEC, including SEC pronouncements.
The financial statements have been prepared using the measurement bases specified by PFRS for
each type of asset, liability, income and expense. These financial statements have been prepared on
the historical cost basis, except for the revaluation of certain financial assets. The measurement bases
are more fully described in the accounting policies that follow.
The financial statements are presented in Philippine peso, the Company’s presentation and functional
currency and all values represent absolute amounts except when otherwise indicated. Functional
currency is the currency of the primary economic environment in which an entity operates.
Financial Assets
Financial assets are recognized when the Company becomes a party to the contractual provisions of the
financial instrument.
Financial assets are measured at fair value through profit or loss (FVTPL) unless these are measured at
fair value through other comprehensive income (FVOCI) or at amortized cost.
The classification of financial assets depends on the contractual terms and the business model for
managing the financial assets. Subsequent to initial recognition, the Company may reclassify its
financial assets only when there is a change in its business model for managing these financial assets.
Business Model
The business model reflects how the Company manages the assets in order to generate cash flows.
That is, whether the Company’s objective is solely to collect the contractual cash flows from the assets
or is to collect both the contractual cash flows and cash flows arising from the sale of assets. If neither of
these is applicable, then the financial assets are classified as part of ‘other’ business model and
measured at FVTPL. Factors considered by the Company in determining the business model for a group
of assets include past experience on how the cash flows for these assets were collected, how the
asset’s performance is evaluated and reported to key management personnel and how risks are
assessed and managed.
SPPI
Where the business model is to hold assets to collect contractual cash flows or to collect contractual
cash flows and sell, the Company assesses whether the financial instruments’ cash flows represent
solely payments of principal and interest (the ‘SPPI test’). In making this assessment, the Company
considers whether the contractual cash flows are consistent with a basic lending arrangement i.e.
interest includes only consideration for the time value of money, credit risk, other basic lending risks and
a profit margin that is consistent with a basic lending arrangement. Where the contractual terms
introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related
financial asset is classified and measured at FVPTL.
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to
collect and sell’ are categorized at FVTPL. Further, irrespective of business model financial assets
whose contractual cash flows are not solely payments of principal and interest are accounted for at
FVTPL. Also, equity securities are classified as financial assets at FVTPL, unless the Company
designates an equity investment that is not held for trading at FVOCI at initial recognition.
The Company accounts for financial assets at FVOCI if the assets meet the following conditions:
a. They are held under a business model whose objective it is “hold to collect” the associated cash
flows and sell; and
b. The contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Any gains or losses recognized in other comprehensive income (OCI) will be recycled upon
derecognition of the asset.
Financial assets at amortized cost are debt financial assets that meet both of the following conditions:
a. These are held within a business model whose objective is to hold the financial assets in order to
collect contractual cash flows; and
b. The contractual terms give rise on specified dates to cash flows that are SPPI on the outstanding
principal amount.
After initial measurement, financial assets at amortized cost are subsequently measured at amortized
cost using the effective interest method, less allowance for credit losses. Amortized cost is calculated by
taking into account any discount or premium on acquisition and fees that are an integral part of the
effective interest rate. The amortization is included in ‘Interest income’ in the statement of income.
Losses arising from credit losses are recognized in ‘Provision for impairment and credit and losses’ in
the statement of income.
For purposes of cash flows reporting and presentation, cash and cash equivalents comprise accounts
with original maturities of three months or less, including cash. These generally include cash on hand,
demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash
and which are subject to insignificant risk of changes in value.
The Company assesses on a forward-looking basis the expected credit loss (ECL) associated with its
financial assets carried at amortized cost and FVOCI. It recognizes a loss allowance for such losses at
each reporting date.
The ECL allowance is based on the credit losses expected to arise on a 12-month duration if there
has been no significant increase on credit risk (SICR) of the financial asset since origination.
Financial instruments subject to the ECL methodology are categorized into three stages as
summarized below:
ii. If a SICR since initial recognition is identified, the financial instrument is moved to ‘Stage 2’ but
is not yet deemed to be credit-impaired.
The Company considers a financial instrument to have experienced a SICR when one or more of
the following quantitative, qualitative or backstop criteria have been met:
Quantitative criteria:
The remaining Lifetime Probability of Default (PD) at the reporting date has increased, compared
to the residual Lifetime PD expected at the reporting date when the exposure was first
recognized, so that it exceeds the relevant threshold.
Qualitative criteria:
In short-term forbearance;
Direct debit cancellation;
Extension to the terms granted; or
Previous arrears within the last 12 months.
Backstop:
A backstop is applied and the financial instrument considered to have experienced a significant
increase in credit risk if the borrower is more than 30 days past due on its contractual payments.
iii. If the financial instrument is credit-impaired, the financial instrument is then moved to ‘Stage 3’.
The Company defines a financial instrument as in default, which is fully aligned with the definition
of credit impaired, when it meets one or more of the following criteria:
Quantitative criteria:
Qualitative criteria:
The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant
financial difficulty. These are instances where:
iv. Financial instruments in Stage 1 have their ECL measured at an amount equal to the portion of
lifetime expected credit losses that result from default events possible within the next 12 months.
Instruments in Stages 2 or 3 have their ECL measured based on expected credit losses on a
lifetime basis.
These are financial assets that are credit impaired on initial recognition. Their ECL is always
measured on a lifetime basis (Stage 3).
d. Measurement of ECL
The ECL is measured on either a 12-month (12M) or lifetime basis depending on whether a SICR
has occurred since initial recognition or whether an asset is considered to be credit-impaired.
Expected credit losses are the discounted product of the probability of default (PD), exposure-at-
default (EAD), and loss-given-default (LGD), defined as follows:
i. The PD represents the likelihood of a borrower defaulting on its financial obligation, either over
the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the obligation.
ii. EAD is based on the amounts the Company expects to be owed at the time of default, over the
next 12 months (12M EAD) or over the remaining lifetime (Lifetime EAD).
iii. LGD represents the Company’s expectation of the extent of loss on a defaulted exposure. LGD
varies by type of counterparty, type and seniority of claim and availability of collateral or other
credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default
(EAD). LGD is calculated on a 12-month or lifetime basis, where 12-month LGD is the
percentage of loss expected to be made if the default occurs in the next 12 months and Lifetime
LGD is the percentage of loss expected to be made if the default occurs over the remaining
expected lifetime of the loan.
The ECL is determined by projecting the PD, LGD and EAD for each future month and for each
individual exposure or collective segment. These three components are multiplied together and
adjusted for the likelihood of survival (i.e. the exposure has not prepaid or defaulted in an earlier
The Lifetime PD is developed by applying a maturity profile to the current 12M PD. The maturity
profile looks at how defaults develop on a portfolio from the point of initial recognition throughout the
lifetime of the loans. The maturity profile is based on historical observed data and is assumed to be
the same across all assets within a portfolio. This is supported by historical analysis.
The 12M and lifetime EADs are determined based on the expected payment profile, which varies by
product type.
The 12M and lifetime LGDs are determined based on the factors which impact the recoveries made
post default. These vary by product type.
i. For secured products, this is primarily based on collateral type and projected collateral values,
historical discounts to market/book values due to forced sales, time to repossession and
recovery costs observed.
ii. For unsecured products, LGD’s are typically set at product level due to the limited differentiation
in recoveries achieved across different borrowers. These LGD’s are influenced by collection
strategies, including contracted debt sales and price.
The assumptions underlying the ECL calculation, are regularly monitored and reviewed. Forward-
looking information shall also be considered in estimating/determining the 12-month and lifetime PD,
EAD and LGD depending on the credit exposure.
Financial Liabilities
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of
the financial instrument.
Financial liabilities are initially measured at fair value, and where applicable, adjusted for transaction
costs. Subsequently, financial liabilities are measured at amortized cost using the effective interest
method.
Dividend distributions to shareholders are recognized as financial liabilities upon declaration by the
Company.
All interest-related charges that are reported in profit or loss are included within interest expense.
Financial liabilities are classified as current liabilities if payment is due to be settled within one year or
less after the end of the reporting period (or in the normal operating cycle of the business, if longer), or
the Company does not have an unconditional right to defer settlement of the liability for at least 12
months after the end of the reporting period. Otherwise, these are presented as non-current liabilities.
Financial assets, or a portion thereof, are derecognized when the contractual rights to receive the cash
flows from the assets have expired, or when they have been transferred and either:
a. The Company transfers substantially all the risks and rewards of ownership; or
b. It neither transfers nor retains substantially all the risks and rewards of ownership and it has not
retained control.
Financial liabilities are derecognized when they are extinguished (i.e. when the obligation specified in
the contract is discharged, cancelled or expires).
Financial assets and financial liabilities are offset and the resulting net amount, considered as a single
financial asset or financial liability, is reported in the statement financial position when the Company
currently has legally enforceable right to set-off the recognized amounts and there is an intention to
settle on an net basis, or realize the asset and settle the liability simultaneously. The right of set-off must
be available at the end of the reporting period, that is, it is not contingent on future event. It must also be
enforceable in the normal course of business, in the event of default, and in the event of insolvency or
bankruptcy, and, must be legally enforceable for both entity and all counterparties to the financial
instruments.
Inventories
Inventories are stated at the lower of cost and selling price less costs to complete and sell. Cost is
calculated using the first-in, first-out (FIFO) method.
At each reporting date, inventories are assessed for impairment. If inventory is impaired, the carrying
amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognized
immediately in the profit or loss.
Other assets are included in current assets if maturity or benefit is realizable within 12 months from the
statement of financial position date. Otherwise, these are classified as noncurrent assets.
These are initially recorded at transaction cost and subsequently measured at cost less impairment
loss, if any.
Associates pertain to all entities over which the Company has significant influence. Significant influence
is the power to participate in the financial and operating policy decisions of the investee, but is not
control or joint control over those policies. Investment in an associate are accounted for under “equity
method” of accounting.
Under the “equity method”, the investments in an associate and joint ventures are carried in the
statement of financial position at cost plus post-acquisition changes in the share in the net assets of the
associates and joint ventures. The statement of comprehensive income reflects the share of the results
of operations of the associates and joint ventures. When there has been a change recognized in the
Upon loss of significant influence over the associate, the Company measures and recognizes any
retained investment at its fair value. Any difference between the carrying amount of the associate upon
loss of significant influence and the fair value of the retained investment and proceeds from disposal is
recognized in the statement of income.
Investment property is carried at fair value, derived from the current market prices for comparable
properties determined annually by external valuers. The valuers use observable market prices,
adjusted if necessary for any differences in the nature, location or condition of the specific asset,
changes in fair value are recognized in profit or loss.
Property, plant and equipment are stated at historical cost less accumulated depreciation and any
accumulated impairment losses. Historical cost includes the purchase price and other expenditure that
is directly attributable to bringing the asset to the location and condition necessary for it to be capable
of operating in the manner intended by management.
The Company adds to the carrying amount of an item of property and equipment the cost of replacing
parts of such an item when that cost is incurred if the replacement part is expected to provide
incremental future benefits to the Company. The carrying amount of the replaced part is derecognized.
All other repairs and maintenance are charged to profit or loss during the period in which they are
incurred.
Land is not depreciated. Depreciation on other assets is charged so as to allocate cost of assets less
their residual value over their estimated useful lives, using the straight-line method. The estimated
useful lives range as follows:
The assets' residual values, useful lives and depreciation and amortization method are reviewed and
adjusted if appropriate, at each financial year-end.
An item of property and equipment is derecognized upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of
the asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the item) is included in the statement of income in the year the item is derecognized.
Intangible Assets
All research and development costs are recognized as an expense unless they form part of the cost of
another asset that meets the recognition criteria.
Amortization is provided to write down the intangible asset on a straight line basis, as follows:
If there is an indication that there has been a significant change in amortization rate, useful life or
residual value of an intangible asset, the amortization is revised prospectively to reflect the new
expectations. If the Company is unable to make a reliable estimate of the useful life of an intangible
asset, the life is presumed to be 10 years.
Assets that are subject to depreciation or amortization are assessed at each reporting date to
determine whether there is any indication that the assets are impaired. Where there is any indication
that an asset may be impaired, the carrying value of the asset [or cash-generating unit (CGU) to which
the asset has been allocated] is tested for impairment. An impairment loss is recognized for the amount
by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s (or CGU’s) fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (CGUs).
Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at
each reporting date.
These are initially recorded at transaction cost and subsequently measured at cost less impairment
loss, if any.
Other Payables
Other Payables include government remittances. These are recognized initially at the transaction price
and subsequently measured at amortized cost using the effective interest rate.
Other payables are classified as current liabilities if payment is due to be settled within one year or less
after the end of the reporting period (or in the normal operating cycle of the business, if longer.
Otherwise, these are presented as non-current liabilities.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
Contingent liabilities and assets are not recognized because their existence will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control
of the entity. Contingent liabilities, if any, are disclosed, unless the possibility of an outflow of resources
embodying economic benefits is remote. Contingent assets are disclosed only when an inflow of
economic benefits is probable.
Share Capital
Equity instruments are measured at the fair value of the cash or other resources received or receivable,
net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of
money is material, the initial measurement is on a present value basis.
The costs of acquiring Company’s own shares are shown as a deduction from equity attributable to the
Company’s equity holders until the shares are cancelled or reissued. When such shares are
subsequently sold or reissued, any consideration received, net of directly attributable incremental
transaction costs and the related income tax effects is included in equity attributable to the Company’s
equity holders.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The Company classifies its fair value measurements using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The fair value hierarchy has the following
levels:
For financial instruments traded in active markets, the determination of fair values is based on quoted
market prices or dealer price quotations. A financial instrument is regarded as quoted in an active
market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency, and those prices represent actual and regularly occurring
market transactions on an arm’s length basis. If the above criteria are not met, the market is regarded
as being inactive. For all other financial instruments, fair value is determined using validation
techniques. In these techniques, fair values are estimated from observable data in respect of similar
financial instruments.
For non-financial assets, the Company uses valuation techniques that are appropriate in the
circumstances and applies the technique consistently. Commonly used valuation techniques are as
follows:
a. Market approach – A valuation technique that uses observable inputs, such as prices, broker
quotes and other relevant information generated by market transactions involving identical or
comparable assets or group of assets.
b. Income approach – A valuation technique that converts future amounts (e.g. cash flows or income
and expenses) to a single current (i.e. discounted) amount. The fair value measurement is
determined on the basis of the value indicated by current mark expectations about those future
amounts.
c. Cost approach – A valuation technique that reflects the amount that would be required currently to
replace the service capacity of an asset (often referred to as current replacement cost).
Upon adoption of PFRS 15, revenue from contracts with customers is recognized upon transfer of
services to the customer at an amount that reflects the consideration to which the Company expects to
be entitled in exchange for those services.
The Company assesses its revenue arrangements against specific criteria in order to determine if it is
acting as principal or agent. The Company has concluded that it is acting as a principal in all of its
revenue arrangements.
Revenue arises mainly from the sales of goods and from rendering of service.
Revenue is recognized only when (or as) the Company satisfies a performance obligation by
transferring control of the promised goods or services to a customer. The transfer of control can occur
over time or at a point in time.
A performance obligation is satisfied at a point in time unless it meets one of the following criteria, in
which case it is satisfied over time:
a. The customer simultaneously receives and consumes the benefits provided by the Company’s
performance as the Company performs;
b. The Company’s performance creates or enhances an asset that the customer controls as the asset
is created or enhanced; and,
c. The Company’s performance does not create an asset with an alternative use to the Company and
the entity has an enforceable right to payment for performance completed to date.
The following specific recognition criteria must also be met before revenue is recognized within the
scope of PFRS 15:
a. Sale of Goods – is recognized when the Company transfers control of the assets at a point in time
to the customer. Invoices for goods transferred are due upon receipt by the customer.
b. Service –is recognized over time and is based on a fixed agreed fee. Invoices for services
transferred are due upon receipt by the customer.
c. Handling charges, commission fees – This recognized as income based on agreed terms and
conditions with customers, which are generally when the services have been performed.
a. Interest Income – It is calculated by applying the effective interest rate to the gross carrying amount
of financial assets, except for:
i. POCI financial assets, for which the original credit-adjusted effective interest rate is applied to
the amortized cost of the financial asset.
ii. Financial assets that are not ‘POCI’ but have subsequently become credit-impaired (or ‘stage
3’), for which interest revenue is calculated by applying the effective interest rate to their
amortized cost (i.e. net of the ECL provision).
b. Interest Income (from cash in bank) – This is recognized as the interest accrues taking into account
the effective yield on the asset.
c. Dividend Income - This is recognized when the Company’s right to receive payment is established.
Cost and operating expenses are recognized in the statement of income upon utilization of the service
or in the date they are incurred.
Short-term Benefits
The Company recognizes a liability net of amounts already paid and an expense for services rendered
by employees during the accounting period. This is measured at undiscounted amount of short-term
employee benefits expected to be paid in exchange for that service. Short-term benefits given by the
Company to its employees include compensation, social security contributions, short-term
compensated absences, bonuses and other non-monetary benefits.
Long-term Benefits
Retirement benefit expense is calculated using the projected unit credit method. The projected unit
credit method considers each period of service as giving rise to an additional unit of benefit entitlement
and measures each unit separately to build up the final obligation. Retirement benefit expense
comprises service cost, interest on retirement benefit liability and re-measurement of retirement benefit
liability. Service costs which include current service costs, past service costs and gains or losses on
non-routine settlements are recognized as expense in profit or loss. Past service costs are recognized
when plan amendment or curtailment occurs. Interest on the retirement benefit liability is the change
during the period in the retirement benefit liability that arises from the passage of time which is
determined by applying the discount rate with reference to a market yield of a government bond.
Interest on the retirement benefit liability is recognized as expense in profit or loss.
The retirement benefit liability recognized is the present value of the retirement benefit obligation minus
fair value of plan assets, if any, at the reporting date. The present value of the retirement benefit
obligation is determined by discounting the estimated future payments.
The Company has not yet established a formal post-employment plan. However, the Company accrues
the estimated cost of post-employment benefits under a defined benefit plan required by the provisions
of the Republic Act No. 7641. The management believes this to be a reasonable approximation of the
amount computed using the projected unit credit method.
Income Taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax, if any, is provided using the balance sheet liability method, on all temporary
differences at the balance sheet date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred income tax liabilities, if any, are recognized for all taxable temporary differences. Deferred
income tax assets are recognized for all deductible temporary differences and carry forward benefits of
unused net operating loss carryover (NOLCO), to the extent that it is probable that taxable profit will be
Deferred tax asset and liabilities, if any, are measured at the tax rates expected in the year when the
asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or
substantively enacted at the balance sheet date.
Leases
All leases are accounted for by recognizing a right-of-use asset and a lease liability except for:
a. Leases of low value assets; and
b. Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over
the lease term, with the discount rate determined by reference to the rate inherent in the lease unless
this is not readily determinable, in which case the Company’s incremental borrowing rate on
commencement of the lease is used. Variable lease payments are only included in the measurement
of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the
lease liability assumes the variable element will remain unchanged throughout the lease term.
Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
a. Amounts expected to be payable under any residual value guarantee;
b. The exercise price of any purchase option granted in favor of the Company if it is reasonable
certain to assess that option; and
c. Any penalties payable for terminating the lease, if the term of the lease has been estimated on the
basis of termination option being exercised.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease
incentives received, and increased for:
a. Lease payments made at or before commencement of the lease;
b. Initial direct costs incurred; and
c. The amount of any provision recognized where the Company is contractually required to dismantle,
remove or restore the leased asset.
When the Company revises its estimate of the term of any lease, it adjusts the carrying amount of the
lease liability to reflect the payments to make over the revised term, which are discounted at the same
discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly
revised when the variable element of future lease payments dependent on a rate or index is revised. In
both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the
revised carrying amount being amortized over the remaining (revised) lease term.
When the Company renegotiates the contractual terms of a lease with the lessor, the accounting
depends on the nature of the modification:
For contracts that both convey a right to the Company to use an identified asset and require services
to be provided to the Company by the lessor, the Company has elected to account for the entire
contract as a lease.
Related party relationships exist when one party has the ability to control, directly or indirectly through
one or more intermediaries, the other party or exercise significant influence over the other party in
making financial and operating decisions. This includes:
a. Individual owning, directly or indirectly through one or more intermediaries, control, or are controlled
by, or under common control with, the Company;
b. Associates;
c. Individuals owning, directly or indirectly, an interest in the voting power of the Company that gives
them significant influence over the Company and close members of the family of any such
individual; and
d. Management entity that provides key management personnel services to the reporting entity, either
directly or through a group entity
In considering each possible related party relationship, attention is directed to the substance of the
relationship and not merely the legal form.
Basic earnings per share (EPS) is computed by dividing net income for the period attributable to
common shareholders by the weighted average number of common shares outstanding during the
period after giving retroactive effect to stock dividends declared and stock rights exercised during the
period, if any. Diluted EPS is calculated by dividing the aggregate of net income attributable to common
shareholders by the weighted average number of common shares outstanding during the period
adjusted for the effects of any dilutive shares.
Post-year-end events up to the date of the auditor’s report that provide additional information about the
Company’s position at reporting date (adjusting events) are reflected in the financial statements. Post-
year-end events that are not adjusting events are disclosed in the notes to financial statements when
material.
The application of these amendments has no significant impact on the Company’s financial statements.
a. Amendments to PFRS 3, Reference to the Conceptual Framework (2020). The changes include
i. Update PFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989
Framework;
ii. Add to PFRS 3 a requirement that, for transactions and other events within the scope of PAS 37
or IFRIC 21, an acquirer applies PAS 37 or IFRIC 21 (instead of the Conceptual Framework) to
identify the liabilities it has assumed in a business combination; and
iii. Add to PFRS 3 an explicit statement that an acquirer does not recognize contingent assets
acquired in a business combination.
b. Amendments to PAS 16, Property, Plant and Equipment - Proceeds before Intended Use (2020).
This amends the standard to prohibit deducting from the cost of an item of property, plant and
equipment any proceeds from selling items produced while bringing that asset to the location and
condition necessary for it to be capable of operating in the manner intended by management.
Instead, an entity recognizes the proceeds from selling such items, and the cost of producing those
items, in profit or loss.
c. Amendments to PAS 37, Onerous Contracts - Cost of Fulfilling a Contract (2020). The changes
specify that the “cost of fulfilling” a contract comprises the “costs that relate directly to the contract”.
Costs that relate directly to a contract can either be incremental costs of fulfilling that contract
(examples would be direct labor, materials) or an allocation of other costs that relate directly to
fulfilling contracts (an example would be the allocation of the depreciation charge for an item of
property, plant and equipment used in fulfilling the contract).
New and Amended PFRS - Effective Subsequent to 2022 but not Adopted Early
b. Amendments to PAS 1 and PFRS Practice Statement 2, Disclosure Initiative – Accounting Policies
(2021). This amends PAS 1 in the following ways:
i. An entity is now required to disclose its material accounting policy information instead of its
significant accounting policies;
ii. Several paragraphs are added to explain how an entity can identify material accounting policy
information and to give examples of when accounting policy information is likely to be material;
the amendments clarify that accounting policy information may be material because of its
nature, even if the related amounts are immaterial;
iii. The amendments clarify that accounting policy information is material if users of an entity’s
financial statements would need it to understand other material information in the financial
statements; and
iv. The amendments clarify that if an entity discloses immaterial accounting policy information, such
information shall not obscure material accounting policy information.
c. Amendments to PAS 8, Definition of Accounting Estimates (2021). The changes to PAS 8 focus
entirely on accounting estimates and clarify the following:
i. The definition of a change in accounting estimates is replaced with a definition of accounting
estimates. Under the new definition, accounting estimates are “monetary amounts in financial
statements that are subject to measurement uncertainty”.
ii. Entities develop accounting estimates if accounting policies require items in financial statements
to be measured in a way that involves measurement uncertainty.
iii. The Board clarifies that a change in accounting estimate that results from new information or
new developments is not the correction of an error. In addition, the effects of a change in an
input or a measurement technique used to develop an accounting estimate are changes in
accounting estimates if they do not result from the correction of prior period errors.
d. Amendments to PAS 12, Deferred Tax related to Assets and Liabilities from a Single Transaction
(2021). The main change is an exemption from the initial recognition exemption provided in PAS
12.15(b) and PAS 12.24. Accordingly, the initial recognition exemption does not apply to transactions
in which equal amounts of deductible and taxable temporary differences arise on initial recognition.
This is also explained in the newly inserted paragraph PAS 12.22A. This applies to annual reporting
periods beginning on or after January 1, 2023.
e. PFRS 17, Insurance Contracts (2018). This new standard requires insurance liabilities to be
measured at a current fulfillment value and provides a more uniform measurement and presentation
approach for all insurance contracts. These requirements are designed to achieve the goal of a
consistent, principle-based accounting for insurance contracts. PFRS 17 supersedes PFRS 4
'Insurance Contracts' and related interpretations. This applies to annual reporting periods beginning
on or after January 1, 2025.
f. Amendments to PFRS 17, Insurance Contracts (2020). The main changes are:
i. Deferral of the date of initial application of PFRS 17 by two years to annual periods beginning on
or after 1 January 2023 and change the fixed expiry date for the temporary exemption in PFRS
4 Insurance Contracts from applying PFRS 9 Financial Instruments, so that entities would be
required to apply PFRS 9 for annual periods beginning on or after 1 January 2023;
ii. Additional scope exclusion for credit card contracts and similar contracts that provide insurance
coverage as well as optional scope exclusion for loan contracts that transfer significant
insurance risk;
iii. Recognition of insurance acquisition cash flows relating to expected contract renewals, including
transition provisions and guidance for insurance acquisition cash flows recognized in a business
acquired in a business combination;
iv. Clarification of the application of PFRS 17 in interim financial statements allowing an accounting
policy choice at a reporting entity level;
v. Clarification of the application of contractual service margin (CSM) attributable to investment-
return service and investment-related service and changes to the corresponding disclosure
requirements;
vi. Extension of the risk mitigation option to include reinsurance contracts held and non-financial
derivatives;
vii. Amendments to require an entity that at initial recognition recognizes losses on onerous
insurance contracts issued to also recognize a gain on reinsurance contracts held;
viii. Simplified presentation of insurance contracts in the statement of financial position so that
entities would present insurance contract assets and liabilities in the statement of financial
position determined using portfolios of insurance contracts rather than groups of insurance
contracts;
ix. Additional transition relief for business combinations and additional transition relief for the date
of application of the risk mitigation option and the use of the fair value transition approach;
x. Several small amendments regarding minor application issues.
The preparation of the financial statements in compliance with PFRS requires the Company to make
judgments and estimates that affect the reported amounts of assets, liabilities, income and expenses
and disclosure of contingent assets and contingent liabilities. Future events may occur which will cause
the assumptions used in arriving at the estimates to change. The effects of any change in estimates are
reflected in the financial statements as they become reasonably determinable.
Judgments and estimates are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the
circumstances.
PAS 21 requires management to use its judgment to determine the entity’s functional currency such
that it most faithfully represents the economic effects of the underlying transactions, events and
conditions that are relevant to the entity.
Where the fair values of financial assets and financial liabilities recorded in the statement of financial
position cannot be derived from active markets, they are determined using valuation techniques that
include the use of mathematical models (Note 7). The input to these models is taken from observable
markets where possible, but where this is not feasible, a degree of judgment is required in establishing
fair values.
Distinction between Operating and Finance Leases for Contracts where the Company is the Lessor
The Company has entered into various lease agreements as lessor. Critical judgment was exercised by
management to distinguish each lease agreement, either as a lessor or a lessee, as either an operating
or finance lease by looking at the transfer or retention of significant risks and rewards of ownership of
a. Rendering of service - The Company determines that its revenue from rendering of services shall be
recognized over time. In making its judgment, the Company considers the timing of receipt and
consumption of benefits provided by the Company to the customers. The Company transfers control
of the services over time, based on the actual service provided to the end of the reporting period as a
proportion of the total services to be provided, because the customer receives and uses the benefits
simultaneously. However, significant services are generally performed within the day.
b. Sale of Goods - The Company determines that its revenue from sale of goods shall be recognized at
a point in time when the control of the goods have passed to the customer, i.e., generally when the
customer has acknowledged delivery of the goods.
The measurement of the expected credit loss allowance for financial assets measured at amortized cost
and FVOCI is an area that requires the use of complex models and significant assumptions about future
economic conditions and credit behaviour (e.g. the likelihood of borrowers defaulting and the resulting
losses). A number of significant judgements are also required in applying the accounting requirements
for measuring ECL, such as:
a. Determining criteria for significant increase in credit risk;
b. Choosing appropriate models and assumptions for the measurement of ECL;
c. Establishing the number and relative weightings of forward-looking scenarios for each type of product
/ market and the associated ECL; and
d. Establishing groups of similar financial assets for the purposes of measuring ECL.
The retirement benefit liability is determined using actuarial valuations. The actuarial valuation involves
making assumptions about discount rates, future salary increases, mortality rates and employee
turnover. Due to the long-term nature of these plans, such estimates are subject to significant
uncertainty. All assumptions are reviewed at each reporting date. The discount rate is based on zero-
coupon yield of government bonds with remaining maturity approximating the estimated average
duration of benefit payment. Future salary increases was based on the Company’s policy taking into
account the prevailing inflation rate. The mortality rate used is based on publicly available mortality
table modified accordingly with estimates of mortality improvements. The employee turnover is based
on the Company’s most recent experience.
The Company measures its lease liabilities at present value of the lease payments that are not paid at
the commencement date of the lease contract, for new lease contracts. The lease payments were
discounted using a reasonable rate deemed by management equal to the Company’s incremental
borrowing rate. In determining a reasonable discount rate, management considers the term of the
leases, the underlying asset, credit risk of the Company and the economic environment. Actual results,
however, may vary due to changes in estimates brought about by changes in such factors.
The Company estimates the useful lives of property, plant and equipment, right-of-use assets,
intangible assets and investment properties based on the period over which the assets are expected to
be available for use. The estimated useful lives of property, plant and equipment, right-of-use assets,
intangible assets and investment properties are reviewed periodically and are updated if expectations
differ from previous estimates due to physical wear and tear, technical or commercial obsolescence
and legal or other limits on the use of the assets.
Based on management’s assessment as of December 31, _____ and _____, there is no change in the
estimated useful lives of the property, plant and equipment, intangible assets and investment properties
during those years. Actual results, however, may vary due to changes in estimates brought about by
changes in factors mentioned above.
The Company reviews its deferred tax assets at the end of each reporting period and reduces the
carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available
to allow all or part of the deferred tax assets to be utilized. Management assessed that the deferred tax
assets recognized as of December 31, ____ and ____ will be fully utilized in the coming years.
The Company is exposed to a variety of financial risks which results from operating and investing
activities. Its risk management is handled by the Chief Executive Officer, and focuses on actively
securing the Company’s short-to-medium term cash flows by minimizing the exposure to financial
markets.
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and
cause the other party to incur a financial loss. This mainly includes risk of non-payment by clients of
their outstanding loan account balance.
The Company has established controls and procedures in its credit policy to determine and monitor the
credit worthiness of customers and counterparties.
Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial
assets as follows:
2022 2021
Cash and cash equivalents (Note )
Loans and other receivables (Note )
Other financial assets at amortized
cost (Note)
The Company continuously monitors defaults of customers and other counterparties, identified either
individually or by group, and incorporates this information into its credit risk controls. Its policy is to deal
only with credit worthy counterparties.
Below is the aging of loans and receivables and other financial assets at amortized cost:
2022
Current Past due but Total
not impaired
Loans and receivables*
(Note)
Other financial assets at
amortized cost (Note )
2021
Current Past due but Total
not impaired
Financial assets at amortized
cost* (Note )
Other financial assets at
amortized cost (Note )
Loans and other receivables totaling ______ (2021: ) are secured by collateral such as land and
vehicles.
Below is the aging of past due but not impaired loans and receivables (discuss also the collaterals and
appraised value):
2022
Within one year More than one year Total
Financial assets at amortized
cost
Other financial assets at
amortized cost
2021
Within one year More than one year Total
Loan receivables
Other financial assets at
amortized cost
The Company does not identify specific concentrations of credit risk as the amounts recognized
resemble a large number of loans and receivables from various borrowers.
Write-off policy
Liquidity Risk
Liquidity or funding risk is the risk that an entity will encounter difficulty in raising funds to meet
commitments associated with financial instruments. Liquidity risk may result from the inability to sell
financial assets quickly at their fair values, counter-party failing on repayment of contractual obligation,
or inability to generate cash inflows as anticipated.
The Company manages the liquidity risk by maintaining a balance between continuity of funding and
flexibility in operations. Treasury control and procedures are in place to ensure that sufficient cash is
maintained to cover daily operational and working capital requirements. Management closely monitors
the Company’s future and contingent obligations and sets up required cash reserves and reserve
borrowing facilities as necessary in accordance with internal policies.
As at December 31, 2022 and 2021, the Company’s financial liabilities have contractual maturities which
are presented below.
2022
Within One Year More Than One Year
Trade and other payables*
Borrowings
Advances from related parties
2021
Within One Year More Than One Year
Trade and other payables*
Borrowings
Advances from related parties
The above contractual maturities reflect the gross cash flows, which may differ from the carrying values
of the liabilities at the reporting dates.
Market Risk
Market risk is the risk that changes in market prices, brought about by changes in interest rates, for
instance, will affect Company’s income. The objective of market risk management is to manage and
control risk exposures within acceptable parameters, while optimizing the return on risk. The Company
is not exposed to this risk as its loans and receivables bear fixed interest rate.
The Company’s capital management objective is to ensure its ability to continue as a going concern
and to provide an adequate return to shareholders by pricing products and services commensurately
with the level of risk. The Company manages its capital structure and makes adjustments to it, in the
light of changes in economic conditions. In order to maintain or adjust the capital structure, the
Company may issue new shares or sell assets to reduce debt. It monitors capital using the debt-to-
equity ratio, as follows:
2022 2021
Total liabilities
Total equity
Debt-to-equity ratio
The Company has complied with the 10,000,000 (1M for lending) minimum capital requirements of a
financing (lending) company (2021: Complied).
The carrying amounts and fair values of the categories of financial assets and liabilities presented in
the statements of financial position are shown below.
2022 2021
Note Carrying Values Fair Values Carrying Values Fair Values
Financial Assets:
Cash and cash
equivalents
Loans and other
receivables
Financial assets at
FVOCI
Other receivables
Other financial assets
at amortized cost
Financial Liabilities:
Trade and other
payables*
Borrowings
Advances from related
parties
*Government remittances not included.
The methods and assumptions used by the Company in estimating the fair values of the financial
instruments are:
a. Cash and cash equivalents – Estimated fair value of fixed interest-bearing deposits is based on
discounted cash flows using the prevailing money-market interest rates for debts with similar
credit risk and remaining maturity. All these financial assets have a maturity of one year, thus their
fair values approximate their carrying amounts.
The Company’s financial assets and financial liabilities all fall under the Level 2 category of the fair
value hierarchy as at December 31, 2022 and 2021. There were no transfers between Level 1 and
Level 2 during the years ended December 31, 2022 and 2021.
2022 2021
Cash on hand
Cash in bank
Cash equivalents
Cash in bank represents current account in a reputable local bank. Current account deposits earn
interest at the respective bank deposit.
Cash and cash equivalents held by the Company are available for use. (discuss restriction, if any)
2022 2021
Products:
2022 2021
Current
Allowance for impairment and credit
losses
Non-current
Allowance for impairment and credit
losses
The Company has provision for impairment and credit loss recognized in the profit or loss during the
year amounted to____________ (2021: _________).
There is no provision for impairment and credit loss recognized or reversed in the profit or loss (2021:
Nil).
Movements on the allowance for impairment and credit losses is shown below:
2022 2021
Beginning
Impairment and credit losses during
the year
Write-off
Ending
The reconciliation of carrying amount and allowance for impairment and credit losses per stage follows:
2022 2021
Stage 1 Stage 2 Stage 3 Purchased Total Total
(12-month (Lifetime (Lifetime credit-
ECL) ECL) ECL impaired
Loans and receivables:
Gross carrying
amount
Allowance for credit
losses
Carrying amount
2022 2021
Advances to related parties
Other advances
Allowance for impairment and credit
loss
The Company has provision for impairment and credit loss recognized in the profit or loss during the
year amounted to,_____ (2021: ____________).
There is no provision for impairment and credit loss recognized or reversed in the profit or loss (2021:
Nil).
All are in Stage 1 and there is no allowance for impairment and credit losses (2021: Nil).
2022 2021
Held for sale
Work in process
Raw materials
The cost of inventories recognized as expense amounted to P____ (2021: ___) (Note __ (COGS).
The Company recognized an impairment loss in held for sale, work in process and raw materials of
P___ (2021: P___), P_______ (2021: P___), P______ (2021: P___), respectively.
2022 2021
2022
Land Vehicles Furniture Total
and and and
buildings machinery equipment
Cost
At January 1, 2022
Additions
Disposals
Transfers to investment property
At December 31, 2022
Carrying amount
At January 1, 2022
At December 31, 2022
2021
Land Vehicles Furniture Total
and and and
buildings machinery equipment
Cost
At January 1, 2021
Additions
Disposals
Transfers to investment property
At December 31, 2021
Carrying amount
At January 1, 2021
At December 31, 2021
Land, buildings and vehicles with carrying amount of P ___ (2021: P___) are pledged as securities for
bank borrowings (Note __).
There are no contractual commitments for the acquisition of property, plant and equipment. Fully
depreciated property, plant and equipment costing _____ are still used (2021: ___). There is no
impairment loss recognized or reversed in the profit or loss (2021: Nil).
2022
Land Building Total
Opening carrying amount
Net gain from fair value adjustment
Additions
Disposal
Transfers to property, plant and equipment
Transfers to / from inventories
Closing carrying amount
The investment properties are valued annually on December 31 at fair value, determined by an
independent professionally qualified valuer.
The fair value of land / land improvements is _______ based on sales comparison. Fair value of
buildings / building improvements is estimated to be the same as the carrying amount. This is not
based on a valuation by a qualified independent valuer.
There are no contractual obligations to purchase, construct or develop investment property or for
repairs, maintenance or enhancements and restrictions on the realisability of investment property or the
remittance of income and proceeds of disposal (2021: Nil).
15. BORROWINGS
Current
Bank borrowings
Other borrowings
Total
Bank borrowings
Bank borrowings mature until year ___ and bear average fixed-rate coupons of ___ annually (2021: __
% annually). The company makes monthly repayments on the bank borrowings. Restrictions imposed
by the lending banks are:
For loans payable recognised at the reporting date for which there is a breach of terms or default of
principal, interest, sinking fund, or redemption terms that has not been remedied by the reporting date,
an entity shall disclose the
following:
(a) details of that breach or default.
(b) the carrying amount of the related loans payable at the reporting date.
(c) whether the breach or default was remedied, or the terms of the loans payable were renegotiated,
before the financial statements were authorised for issue.
Total borrowings include secured liabilities of ___ (2021: ___). Bank borrowings are secured by ______
(Note -#PPE).
2022 2021
Trade payables
Amount due to related parties (Note)
Social security and other taxes
Deferred income
Accrued expenses
The Company is authorized to issue _________ shares (2021: _____ shares) of common stock at P1
(2021: __). All issued shares are full paid and have equal rights to vote at general meetings and
receive dividends.
There are no shares in the company held by the company and shares reserved for issue under options
and contracts for the sale of shares (2021: Nil).
On ______, the Board of Directors and the vote of the shareholders owning or representing at least
two-thirds of the outstanding capital stock approved the increase of capital stock from P0,000,000
divided into 200,000 shares of the par value of P00 each to P00,000,000 divided into ,000,000 shares
of the par value of P00. The subscription is paid by way of conversion of advances made by
shareholders (or cash). The application for the increase was received by SEC on ______ (or is not yet
submitted to SEC.
Deposit for Future Stock Subscriptions
On _______, the Board of Directors re-assessed the need to appropriate Cumulative earnings and
approved the appropriation of ,000,000 cumulative earnings for the _________ (purpose). Target
period to implement the purpose is up to year _______ (required by SEC).
2022 2021
Beginning inventories
Purchases
Goods for sale
Ending inventories
The Company recognizes retirement benefit for its employees based on the provision of R.A. No.
7641. Pursuant to the provisions, a covered employee who retires shall be entitled to retirement pay
equivalent to at least 22 days or 75% of monthly salary for every year of service, a fraction of at least
six months being considered as one whole year. A covered employee is one who has reached at least
five years of service to the Company and is at least sixty-years old at the time of retirement. The
Company has no existing plan assets at the end of the year.
The following are the amounts recognized in the financial statements based on valuation as at
December 31, 2022 and 2021.
a. Details of the retirement benefit expense recognized in the profit or loss follow:
2022 2021
Current service cost
Interest cost
b. The retirement liability recognized in the statement of financial position as at December 31, 2022
and 2021 follows:
2022 2021
Present value of defined benefit
obligation
Fair value of plan assets
2022 2021
Balance at January 1
Current service cost
Interest cost
Balance at December 31
,
d. The key assumptions used as at the statement of financial position date follow:
2022 2021
Discount rate
Average increase in salary rate
Average remaining working life
e. Sensitivity Analysis
Increase by 0.5% on discount rate will result to decrease on retirement liability by ______ (2021:
___ ) while decrease of 0.5% will increase the retirement liability by ____ (2021: __). Increase by
0.5% on salary growth will result to increase on retirement liability by __ (2021: ____) while
decrease of 0.5% will decrease the retirement liability by ___ (2021: ___).
The Company has not engaged any actuary to obtain an actuarial report to determine the present valid
of the retirement benefit obligation.
20. LEASES
2022 2021
Up to 1 year
More than 1 year to 2 years
More than 2 years to 5 years
More than 5 years
2022 2021
Short-term lease expense
Low value lease expense
Expense relating to variable lease payments not
included in the measurement of lease liabilities
Aggregate undiscounted commitments for short-
term leases
To include
Income from subleasing the right of use asset
Significant leasing info that includes the leasing activities, extension / termination options, residual
value guarantees, leases not yet commenced but lessee is committed, restrictions under lease
agreement
2022 2021
Current
Current tax on profit for the year
Deferred tax:
Origination and reversal of temporary differences
Effect of change in tax rate
The reconciliation of income tax computed at statutory tax rate based on pretax income to actual
provision for income tax follows:
2022 2021
Financial income (loss) before tax
Permanent / Temporary differences:
Non-deductible expense
Income subjected to final tax ( ) ( )
NOLCO ( ) ( )
Others
Taxable income
Tax rate 25% or 20% 25% or 20%
Current income tax expense
The Company did not recognized deferred tax asset on allowance for impairment and credit losses, and
NOLCO (2021: Nil).
On September 30, 2020, the Bureau of Internal Revenue has issued RR No. 25-2020 to implement
Section 4 (bbbb) of Republic Act No. 11494, otherwise known as the “Bayanihan to Recover as One
Act”. This allows qualified businesses or enterprises which incurred net operating loss for taxable
years 2020 and 2021 to carry over the same as a deduction from its gross income for the next five (5)
consecutive taxable years immediately following the year of such loss. As a result, the Company will
benefit from this tax relief.
Expiry dates of NOLCO and unused tax benefit are presented below:
Year incurred Amount of Used Expired Balance Unused tax Valid until
On the fourth taxable year, immediately following the year in which it commenced its business
operations, the Company will be subject to the minimum corporate income tax (MCIT) which is 1% of
the Company’s gross income beginning July 01, 2020 until June 30, 2023, as defined under the tax
regulations, and will be paid at the end of the year whenever the regular corporate income tax is lower
than the MCIT. Any MCIT paid can be applied against the regular corporate income tax within the next
three years after the year it was paid.
The Company is subject to MCIT. Below is the computation for MCIT:
2022 2021
Current tax on profit for the year or MCIT,
whichever is higher
Less: Prior year excess tax credits
Current year creditable withholding tax
Payments for 1st to 3rd quarter
Payable (Prepaid)
On March 26, 2021, Republic Act No. 11534 or the “Corporate Recovery and Tax Incentives for
Enterprises (CREATE) Act” was signed into law amending certain provisions of the National Internal
Revenue Code of 1997.
The key amendments to the Tax Code under the CREATE Act include, but not limited to, the following:
2022 2021
Net income (loss) attributable to
Company’s shareholders
Divided by weighted average of
outstanding common shares
Basic
Diluted
There were no outstanding convertible preferred shares and bonds or other stock equivalents that may
be considered as potential dilutive common shares (2021: Nil).
Goods are sold based on the price lists in force and terms that would be available to third parties.
The receivables from related parties are due __ months after the date of sales. The receivables are
unsecured and bear no interest. There are no provisions held against receivables from related parties
(2021: P__)
The payables to related parties are due __ months after the date of sales. The payables bear no
interest.
Cash advances from related parties are due ____ . These are unsecured and bear no interest. (should
be current if not definite repayment term)
The total compensation of the Board of Directors and other key management personnel was P___
(2021: P___) broken down as follows:
In the normal course of business, the Company makes various commitments and incurs certain
contingent liabilities that are not given recognition in the accompanying financial statements. The
Company’s management is of the opinion that losses, if any, that may arise from these commitments
and contingencies will not have a material effect on the Company’s financial statements.
The financial statements of the Company were authorized for issue by the Board of Directors
(BOD) on ______.The BOD has the power to amend the financial statements after issue.
b. There is no other non-adjusting event after the end of the reporting period
To disclose the nature of the event, and an estimate of its financial effect, or a statement that such
an estimate cannot be made.
Presented below is the supplementary information which is required by the BIR under its existing
revenue regulations to be disclosed as part of the notes to financial statements. This supplementary
information is not a required disclosure under PFRS.
a. The Company is a VAT registered company with VAT output tax declaration _________ . It has
zero-rated and exemptsales totalling __________ pursuant to the provisions of applicable
law/regulations.
OR
The company is a non-VAT registered company engaged in the business of
___________ and paid the amount of P_____________ as percentage tax.
c. The landed cost of the company’s importations amounted to P____________ for the
year, with paid/accrued amount of P_________ as customs duties and P_________ as tariff
fees.
The Company has no transaction that requires payment of documentary stamp tax importations
during the year.
2022
Real estate taxes
Mayor’s permit
PTR
BIR annual registration
Percentage taxes
SEC registration
f. The amount of withholding taxes paid/accrued for the year amounted to:
2022
Tax on compensation and benefits
Creditable withholding taxes
Final withholding taxes
The Company has no withholding tax paid / accrued during the year.
h. The Company does not have any deficiency tax assessments with the BIR or tax cases
outstanding or pending in courts or bodies outside the BIR in any of the open period.
Requirements under RR 34-2020 (no need to disclose if required to file form 1709)
The Company is not covered by the requirements and procedures for related party transactions
provided under this RR.
The following are required to file and submit the Related Party Transactions Form, together with the
Annual Income Tax Return:
a. Large taxpayers;
b. Taxpayers enjoying tax incentives, i.e. Board of Investments (BOI)-registered and economic zone
enterprises, those enjoying Income Tax Holiday or subject to preferential income tax rate;
c. Taxpayers reporting net operating losses for the current taxable year and the immediately
preceding two (2) consecutive taxable years; and
d. A related party, as defined under Section 3 of Revenue Regulations (RR) No. 19- 2020, which has
transactions with (a), (b) or (c).