Notes

Question 1

Steps in Accounting Cycle in Chronological Order
1. Analyzing the source documents
2. Recording in a journal
3. Posting to the ledger
4. Unadjusted trial balance
5. Adjusting entries
6. Financial statements
7. Closing entries
8. Post closing trial balance
9. Reversing entries
a. Accrued income & Accrued Expense
b. Prepaid expense, using expense method
c. Unearned income, using income method
Unsa ang na belong as recording phase

Answer 1

1 to 3

Question 2

Steps in Accounting Cycle in Chronological Order
1. Analyzing the source documents
2. Recording in a journal
3. Posting to the ledger
4. Unadjusted trial balance
5. Adjusting entries
6. Financial statements
7. Closing entries
8. Post closing trial balance
9. Reversing entries
a. Accrued income & Accrued Expense
b. Prepaid expense, using expense method
c. Unearned income, using income method
Unsa ang na belong as summarizing phase

Answer 2

4 to 9

Question 3

_____________ Characteristics <— are the attributes that make the information in the financial statements useful to users

Answer 3

Qualitative

Question 4

2 kinds of Qualitative characteristics

Answer 4

1. Fundamental <– focus is on content or substance of info
2. Enhancing <– focus is on presentation and form of info

Question 5

Qualitative Characteristics
1. Fundamental
a. _________
i. _________
ii. _________
iii. _________
iv. _________
b. _________
i. _________
ii. _________
2. Enhancing
a. _________
b. _________
c. _________
d. _________

Answer 5

Qualitative Characteristics
1. Fundamental
a. Faithful representation
i. Free from error
ii. Completeness
iii. Neutrality
iv. Measurement Uncertainty
b. Relevance
i. Predictive value
ii. Confirmatory Value
2. Enhancing
a. Verifiability
b. Comparability
c. Understandability
d. Timeliness

Question 6

PRESENTATION OF ASSETS
Current Asset
- _________
- _________
- _________
Noncurrent Assets - residual definition

PRESENTATION OF LIABILITIES
Current Liabilities
-_________
- _________
- _________
- _________
Noncurrent Liabilities - residual definition

Answer 6

PRESENTATION OF ASSETS
Current Asset
- cash or cash equivalent, unless restricted to settle a liability for at least 12 months after the reporting period
- Held for trading
- Expects to realize, intends to sell or consume within the normal operating cycle
- To be realized within 12 months after the reporting period
Noncurrent Assets - residual definition

PRESENTATION OF LIABILITIES
Current Liabilities
- Expected to be settled within the normal operating cycle
- Incurred for trading
- Due to be settled within 12 months after the reporting period
- Does not have the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period
Noncurrent Liabilities - residual definition

Question 7

EQUITY
Is generally composed of _________ & _________
- _________
- _________
- _________
- _________
- _________
- _________
- _________

Answer 7

EQUITY
Is generally composed of CONTRIBUTED CAPITAL & EARNED CAPITAL
- Issued share capital
- Subscribed share capital
- Share premium
- Subscription receivable (deduction from equity)
○ But present as current asset if currently collectible
- Retained earnings
- Other comprehensive income
- Treasury shares (deduction from equity)

Question 8

EVENTS AFTER THE REPORTING PERIOD
- Occur between the end of the reporting period and date of issue of financial statements
- Adjusting events
○ Condition already existed at the end of the reporting period
○ Require adjustment
- Nonadjusting event
○ Indicative of conditions that arise after the end of reporting period
○ Disclosure only
- Financial statements authorized for issue
○ Board of directors reviews the financial statements and authorizes them for issue

Answer 8

Sag oha lang

Question 9

Formula sa
Comprehensive Income

Answer 9

Profit or Loss + OCI

def: Change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners. So wai labot ang share capital, div declared.

Question 10

Formula sa
Profit or Loss

Answer 10

Total income less total expense, excluding other comprehensive income

Question 11

Formula sa
OCI

Answer 11

Items of income and expense (including reclassification adjustments) that are not recognized in P/L as required or permitted by other PFRSs

Question 12

Asay OCI that may be recycled to
I. P/L
II. RE

a. Change in FV of an equity investment measured at FVOCI
b. Net remeasurement gain or loss on defined benefit plans
c. Change in FV of a debt investment measured at FVOCI
d. Gain or loss on credit risk of a financial liability designated at FVPL (FV option)
e. Gain or loss on translating the FS of a foreign operation
f. Unrealized gain or loss of derivative contracts designated as a cash flow hedge
g. Revaluation surplus during the year

Answer 12

a. II
b. II
c. I
d. II
e. I
f. I
g. II

OCI THAT MAY BE RECYCLED TO P/L
- Change in FV of a debt investment measured at FVOCI
- Gain or loss on translating the FS of a foreign operation
- Unrealized gain or loss of derivative contracts designated as a cash flow hedge

OCI THAT MAY BE RECYCLED TO Retained Earnings
- Change in FV of an equity investment measured at FVOCI
- Net remeasurement gain or loss on defined benefit plans
- Gain or loss on credit risk of a financial liability designated at FVPL (FV option)
Revaluation surplus during the year

Question 13

How to report change in acctg estimate

Answer 13

○ Currently and prospectively by including in P/L
§ Period of change only
§ Period of change and future periods

Question 14

Definition of Acctg estimate

Answer 14

○ Monetary amount in the FSs that is subject to measurement uncertainty
○ Measurement uncertainty
§ Monetary amounts –> cannot be directly observed
§ Estimated

Question 15

Examples of actcg estimate

Answer 15

○ Loss allowance for expected credit loss
○ NRV of inventory and inventory obsolescence
○ FV of asset and liability
○ Depreciation
○ Provision for warranty

Question 16

How to report change in acctg policy/principle

Answer 16

○ According to transitional provisions
○ If no transitional provisions, apply retrospectively
○ If retrospectively, restate FSs of prior periods.

Question 17

Why there is a change in acctg policy

Answer 17

○ required by PFRS
○ If there is no requirement by PFRS, the change will result more relevant and faithfully represented information (voluntary change)

Question 18

Unsay conditions for a NCA to be classified as HFS

Answer 18

1. Available for immediate sale in its present condition
2. Sale is highly probable

Question 19

Sale is highly probable if:
1 PARU

Answer 19

1. Sale is expected to be completed within ONE year from the date of classification
2. Committed to a PLAN to sell the asset
3. With ACTIVE program to find a buyer
4. REASONABLE sale price with current fair value
5. With INLIKELY significant changes to the plan

Question 20

Price that would be received to sell an asset in an orderly transaction between market particiapnts at the measurement date

Answer 20

Fair value

Question 21

Incremental cost directly attributable to the disposal of an asset, excluding finance cost and income tax.
Includes:
- Commissions to brokers and dealers
- Levies by regulatory agencies
- Transfer tax and duties

Answer 21

Cost to Sell

Question 22

When mag ka impairment loss as HFS

Answer 22

Carrying Value > FV-COD *to P/L

Ang recovery of impairment loss is limited to cumulative impairment loss previously recognized

Question 23

If an asset or a group no longer meets the classification criteria as HFS, it shall be measured at:

Answer 23

Measurement:
LOWER of
a. CV had it not been HFS
b. RA (Higher of FVLCOD & VIU)

Ang gain/loss on reclass, from HFS to PPE is…
CV as HFS > Measurement^ = Loss
CV as HFS > Measurement^ = Recovery

Question 24

Asa mapunta ang G/L on reclass from HFS to PPE if
a. Cost model
b. Reval model
is it to P/L or OCI

Answer 24

a. P/L
b. OCI

Question 25

A single external customer with at least 10% of the total EXTERNAL revenue

Answer 25

Major customer Disclosed: - total amt of revenue - segments reporting revenue from the major customer (no need to disclose amount) No need to disclose teh identity

Question 26

unsay minimum external revenue of reportable segments

Answer 26

at least 75% of the total external revenue

Question 27

Unsay tawag anang component of an entity that has the ff characteristics: 1. Engage in business activities 2. operating results are regularly reviewed by the chief operating decision maker 3. discrete financial information is available

Answer 27

Operating segment

Question 28

Refers to a function rather than a manager with a specific title. Functions: - assess the performance of operating segments - allocate resources to operating segments

Answer 28

Chief Operating Decision Maker

Question 29

Operating segment is reportable if it qualifies the quantitative thresholds. Unsa ang thresholds

Answer 29

1. Revenue test Revenue (external and internal) is ≥ 10% total revenue (external and internal) of all operating segments 2. Asset test Assets are ≥ 10% total assets of all operating segment 3. Profit or Loss Profit or loss is ≥ 10% of the greater in absolute amount of - total profit of operating segments with profit - total loss of operating segments with losses

Question 30

External Revenue Reporting, define, heh

Answer 30

✓External revenue of reportable segments is ≥ 75% total external revenue of all operating segment ✓Not met, additional segments are included even if none of the quantitative thresholds are met ✓Aggregation Criteria - similar in economic characteristics Nature of Products and services Nature of Production process Type of Customer Nature of Regulatory environment Methods used to provide product/services

Question 31

two views of interim reporting

Answer 31

1. Integral view - interim period is considered as an integral part of teh annual accounting period - costs are allocated to the interim periods benefitted 2. independent view - each interim period is considered a discrete or separate accounting period - costs are expensed immediately when incurred

Question 32

A party that has the ability to a. Control the other party or b. exercise significant influence over the other party in making financial and operating decisions, or c. if the related party entity and another entity are subject to common control

Answer 32

Related Party JACKPo Joint venture Associate Control Key management personnel Children Spouse or domestic partner dependents Post employment benefit plan

Question 33

What are the related party disclosures

Answer 33

✓Relationship between parent and subsidiaries - name of parent entity - ultimate controlling party - next most senior parent that produces FS for public use ✓Management compensation - Short term employee benefit - Post employment benefit - Other long term benefit - Termination benefits - Share based payment benefits ✓Related party transactions - nature of relationship info about transactions and outstanding balance

Question 34

Standard medium of exchange - on hand - withdrawn immediately Must be unrestricted and immediately available for use in current operation

Answer 34

CASH

Question 35

- Short term, highly liquid investments that are readily convertible to cash - Mature within 3 months (90 days) or less from acquisition date

Answer 35

Cash equivalent

Question 35

Asay Cash Equivalent ani 1. Treasury bills 2. Treasury bonds and notes 3. Commercial papers 4. Money market instruments 5. Time deposit 6. Equity securities 7. Redeemable preference shares

Answer 35

1 3 4 5 7 <-- assuming purchased 3 months or less from maturity date 2. NCA 6. Current/NCA

Question 36

Related parties include all of the following, except A. Parent, subsidiary and fellow subsidiaries B. Associate C. Key management personnel and close family members of such individuals D. Two venturers simply because they share joint control over a joint venture

Answer 36

D. Two venturers simply because they share joint control over a joint venture

Question 37

Close family members of an individual include all of the following, except A. The individual’s spouse and children B. Children of the individual’s spouse C. Dependents of the individual or the individual’s spouse D. Brother or sister of the individual

Answer 37

D. Brother or sister of the individual

Question 38

The minimum disclosures about related party transactions include all, except A. The amount of the transaction B. The amount of outstanding balance C. Allowance for doubtful accounts related to outstanding balance D. The amount of similar transaction with unrelated parties

Answer 38

D. The amount of similar transaction with unrelated parties

Question 39

Which is not a mandated disclosure about related party transactions? A. Relationship between parent and subsidiaries. B. Names of all associates that an entity has dealt with during the year. C. Name of the entity’s parent and if different, the ultimate controlling party. D. If neither the entity’s parent nor the ultimate controlling party produces financial statements available for public use, then the name of the next most senior parent that does so.

Answer 39

B. Names of all associates that an entity has dealt with during the year.