PFRS 9 because receivables are

financial assets RECEIVABLES

RECEIVABLES IN GENERAL
Measurement Initial Subsequent Classifications FS
Presentation
Trade Fair Value + Amortized  Adv to shareholders – Trade & Other
Receivables = Transaction Cost Non-current Receivables –
ordinary course Cost Initial Receivables all trade and current
of business, measurement non trade
cashable within Less: receivables
the normal Principal  Adv to affiliates – LT
operating cycle Repayments investment
or 1 year, Less:
impairment/
whichever is uncollectibilit
 Adv to Suppliers –
longer to be +/- Current Asset
current asset amortizations
Non-trade  Subscription Rec –
Receivables =
Deduction from SHE,
arising from
other sources,
unless ST then it is
cashable within Current Receivable
12 months to be
current asset  Debit balance in AP –
Current Receivable
bec. Normal balance is credit,
nasobrahan ang bayad natin so
parang adv to suppliers

 Accrued Income –
Current Receivable

 Claims Receivable –
Current Receivable

 Deposits – Current
Receivable

 Special deposits in LT
Contract – Non-current
Receivable
 ACCOUNTS RECEIVABLE
Trade AR
Measurement Initial Subsequent
Transaction price or Amortized Cost which is
Invoice Price, always actually the Net
net of trade discount or Realizable Value
volume discount (NRV)
= gross balance less
allowances
Credit balances
cannot be offset against
AR with positive (debit)
balances. These are
presented as Current
Liabilities

Accounting for AR Sale AR collected discount AR collected no discount

Practically correct AR 7200 Cash 7056 Cash 7200
1. Gross method – hindi pa Sales 7200 Sales Disc 144 AR 7200
bawas ng cash discount, AR 7200
recorded only when taken by
the buyer
2. Net Method – bawas na, no Sale AR collected discount AR collected no discount
AR 7056 Cash 7056 Cash 7200
cash discount recorded na
Sales 7056 AR 7056 AR 7056
upon availment of cash SD Forfeited 144
discount Theoretically correct

T-accounts 1. Allowance for sales discount

Upon allowance Sales discount xx
Accounts Receivable Allowance for SD xx
Beg. Balance Collections Upon taking SD Allowance for SD xx
Credit Sales Sales Discount Sales Discount xx if kulang ang allowance
Sales Discount Forfeited Sales Returns from credit AR xx
Recovery collection of written off sales 2. Allowance for Sales Return
Write-off debit ADA, credit AR Sales Returns xx
Note as Payment from AR Allowance SR xx
magiging NR na
Ending balance gross Allowance SR xx
end balance of AR Sales Return xx if kulang ang allowance
AR xx
Shipping terms 3. Allowance for Freight Charges
FOB shipping point = buyer must pay
FOB destination = seller must pay 4. Allowance for Doubtful Accounts
Freight Collect = buyer actually paid Direct Write off Allowance Method
Freight Prepaid = seller actually paid tax purposes Accounting purp
Collectability No entry DA Exp/BDE xx
becomes doubtful ADA xx

Write-off DAE/BDE xx ADA xx

Bad debt expense is an admin
AR xx AR xx
expense. Selling expense sya if
Recovery AR xx AR xx
sales manager ang may No effect in AR, net DAE/BDE or gain xx ADA xx
authority to grant credit income, working Cash xx Cash xx
capital AR xx AR xx
 % of AR
Direct Write off Balance Sheet Method
= Allowance for DA
(required end balance) Aging of AR
Accounting for
Bad Debts

Allowance Method Income Statement Method % of Credit Sales

= DA Expense (expense)

Mixed
Allowance for Doubtful Accounts
Write-off Beg. Balance
DA Expense
Recovery

End Balance

Trade Receivable if silent

NOTE RECEIVABLE
Initial measurement Subsequent Measurement
Short Term NR Face Value Amortized Cost or the CA
- Assuming discounting is immaterial
- Interest and Non-interest Bearing
Long Term NR Initial measurement Subsequent Measurement
Interest bearing Reasonable rate = Face Value
nominal rate = market rate
Amortized Cost or the CA
Unreasonable rate = Present Value
nominal rate not equal to market rate
Non-interest bearing Present Value Amortized Cost or the CA

Effective Interest Table (method)

Date Nominal Interest Effective Interest Principal Repayment Carrying Amount
Based on Face Value Based on Carrying amount Always deducted, instalment
Interest Income payment

Trade Receivable = Current Asset

Non trade = no principal repayment = currently maturing = current asset
= no principal repayment = whole amount = non-current asset

Non Trade = with Principal Repayment = the amount rec within 12 mos or less =
current receivable, the remaining is non-current

LOANS RECEIVABE financial asset din, LT if silent

Initial measurement Subsequent Measurement Impairment of Loans
Face Value xx Amortized Cost RA < CA
Direct origination cost xx PELN = premium effective lower than nominal
 CA must include accrued int income
Less: Orignation Feeeeminus mo (xx)  RA is PV of the modified future CF using the
ICV > FV or Direct Orig Cost > Orig Fee
ORIGINAL effective rate
Initial Carrying Value ICV xx Deducted to CA
 Pwedeng directly or ilagay sa allowance
FV + transaction cost lang din naman to
DEHN = discount effective higher than nominal account
ICV < FV or Direct Orig Cost < Orig Fee  RA is amortized afterwards
Added to CA
 RECEIVABLE FINANCING
Pledge/Hypothecation AR Assignment AR Factoring AR Discounting of NR
Collateral security for loans, so Collateral din sya Usually without recourse, Without With
secured borrowing transaction sya AR assigned xx notification basis recourse recourse
AR unassigned xx
Sold outright, NR Form = sale
With Without
is derecognized Substance =
Not formal Formal recourse recourse borrowing with
General AR Specific Receivable Form = sale sangla na AR
Substance = Transferor not
No right transferred Right to collect only
borrowing with liable in case Conditional sale
Ownership not transferred Ownership not transferred sangla na AR debtor fails to pay Contingent
liability is
Pledge receivables are not Transferor disclosed in notes
derecognized, thus no change in liable in case to FS
AR balance. debtor fails to
pay. Secured
borrowing
We guarantee A liability is
payment. recognized
Notification Non-notif
FV of loan xx basis basis FV of AR xx MaturityValue(Principal + int) xx
Discount on Loan/Charges (xx) Commissions and Charges (xx) Disc (MV x Disc % x Disc Period) (xx)
Net Proceeds xx Debtors are Debtors not Factor’s Holdback (xx) Disc period na remaining/unexpired
notified, sa notified so, sa Net Proceeds xx Net Proceeds xx
bank na entity pa din sila
magpay magpay Receivable on our part, these are also
cushion for sales returns discount and
alowances for the bank

FV of loan (% FV of AR) xx SP net proc + f-holdback xx SP (net proceeds) xx

Commissions and Charges (xx) CA of AR (NRV) (xx) CA of NR + Accrued int (xx)
Net Proceeds xx Gain/Loss on Factoring xx Gain/Loss on Discounting xx
Only in without recourse
No gain/loss on secured borrowing
Journal Entries
CA of AR xx
CA of Loans payable Without Recourse
(Beg. Bal less payments) (xx) Cash (net proceeds) xx
Equity on Assigned AR xx Loss on Discounting xx
Note Receivable xx
Gain on Discounting xx
Interest Income xx

With recourse – conditional sale

Cash (net proceeds) xx
Loss on Discounting xx
NR Discounted xx
Gain on Discounting xx
Interest Income xx

With recourse – secured

borrowing
Cash (net proceeds) xx
Interest Expense xx
Liab for N Discounted xx
Interest Income xx

Dishonoured Notes = not collected at maturity.

Transferred from NR to AR = maturity value +
direct sot or protest fee.