Ferrari company

Year 1

Angelie De Ramos Delsie Falculan

Always Driven
R EAL E STATE
COM PAN Y falculan_delsie@yahoo.com

043-300-3707

Always Driven
Ferrari Real Estate Company

Year 1 Annual Report

Contents
1 CEO letter 3 Statement of Financial Performance 4 Statement of Financial Position 5 Statement of Changes in Shareholders Equity 6 Statement of Cash Flows 7 Notes to Financial Statements

Ferrari Real Estate Company

Year 1 Annual Report

Letter from the CEO

Year One marks the inception of Ferrari Company, with a vision to seek out and provide prudent global real estate investment opportunities for our potential investors in the world of Monopoly.
We have achieved a remarkable feat in a short period of time. Owing to the passion and determination of our young dynamic team, we have remained profitable and managed to secure a range of exclusive real estate projects which we are now proud to introduce to our investors. We are dedicated to identify to identify areas of land with the greatest potential for future investment and development. Our focus extends far and wide with concentration on specific, attractive and mostly visited Monopoly properties. Our company does not only depend on a propertys rent but also on how other companies land and rent on that property. In the second year, we envision to own the orange group monopoly. In connection to this, we have already owned New York Avenue and St. James Place, one of the most commonly landed -on properties on the whole board. Having owned these properties, we look forward to developing a monopoly for a continued strength in the years to come. Also worth mentioning is our sizeable cash balance, M 1,162.00 which will enable us to acquire more properties for the next year. This will pave way for a continuous development of our properties. With this, rent income will upsurge, thereby increasing the return on investments. Our competitors tend to shoot for those properties that have the potential for the highest absolute rents. Those groups can absolutely bankrupt another player even when underdeveloped. But, purely in terms of growth, they're actually two of the weakest groups since they are costly to develop. Our approach is simple: Enter the group with an average cost and advantageous position on the board, relative to spaces to which competitors are commonly re-directed. This is to enable us to bring to our potential investors a more convenient and quicker time for both making the former investment and earning a return on it. By delivering an impeccable service to our clients, we are truly be proud of our commitment, expertise and experience in providing high-standard solutions to investors in the monopoly real estate market. One of our key focus areas since we commenced our journey is within land investment. With land being a finite resource, its longevity and investment stability is supreme and incomparable. Security is what we aim to provide and our investment choices reflect our desire to deliver distinctive yet safe investment opportunities for our clients. Our greatest asset is our dedicated, qualified and professional team, united in the spirit of innovation, customer service and business excellence. Together, we promise that your relationship with us will be personally and commercially rewarding. Ferrari is a company built on the exercise and commitment of our people. Coming from a revitalized year, optimism remains high in the next year. With most competitors registering positive gains in year one, we expect fiercer competition and greater challenges as companies gear for growth. We at Ferrari, remain undeterred in fulfilling our vision to be the best real estate company for all our shareholders and clients. We are looking forward to having you on board and be rest assured that with the Ferrari Company, your investment will be prosperous.

Ty M. Bollinger Chairman, President and CEO

Ferrari Real Estate Company

Year 1 Annual Report

Financial Statements

Contents
Statement of Financial Performance Statement of Financial Position Statement of Changes in Shareholders Equity Statement of Cash Flows Notes to Financial Statements page 3 4 5 6 7

REAL E STATE
COM PAN Y

Ferrari Real Estate Company

Year 1 Annual Report

Statement of Financial Performance

Ferrari Company Statement of Financial Performance For the Game Year-Ended Month 13, Year 1

Total Revenue Rent Revenue Salary Revenue Miscellaneous Revenue Total Income Total Expense: Rent Expense Total Expense Income before Tax Less: Income Tax Expense Net Income

100.00 600.00 30.00 730.00

M M M

148.00 148.00 582.00 58.20 523.80

Ferrari Real Estate Company

Year 1 Annual Report

Statement of Financial Position

Ferrari Company Statement of Financial Position As of Game Year-Ended Month 13, Year 1 ASSETS Note Current Assets Cash on Hand Total Current Assets Non-current Assets Property and Buildings Total Non-current Assets TOTAL ASSETS M M 1,162.00 1,162.00

M M

920.00 920.00 2,082.00

LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Trade and other Payables Total Current Liabilities Shareholder Equity Contributed Capital Retained Earnings Total Shareholders Equity TOTAL LIABILITIES AND SHAREHOLDERS EQUITY M M M 1500.00 523.80 2023.80 2082.00 4 M M 58.20 58.20

Ferrari Real Estate Company

Year 1 Annual Report

Ferrari in Equity Statement of Changes

Ferrari Company Statement of Changes in Shareholders' Equity For the Game Year-Ended Month 13, Year 1

Contributed capital, start of turn 1 Contributed capital, turn 13 Net Income Retained Earnings, turn 13 Balances, turn 13

1500.00 1500.00 523.80 523.80

2023.80

Ferrari Real Estate Company

Year 1 Annual Report

Ferrari Flows Statement of Cash

Ferrari Company

Statement of Cash Flows For the Game Year-Ended Month 13, Year 1 Cash flow from Operating Activities Received from Passing Go Received from Rentals Received from Miscellaneous Paid for Rentals Net Cash flows provided by Operating Activities Cash flow from Investing Activities Payment for the Acquisition of Land Net Change in Cash for the Year Beginning Cash Ending Cash

M M

600.00 100.00 30.00 (148.00) 582.00 (920.00) 338.00 1500.00 1162.00

Ferrari Real Estate Company

Year 1 Annual Report

Ferrari Statements Notes to Financial

Note 1. Organization and Nature of Business Ferrari Company is engaged in real estate operations as a developer of raw land, residential subdivision and mixed-use urban projects including condominium and commercial buildings, industrial and farm estates. Ferrari Company is a professionally-managed portfolio of diversified real estate holdings and is basically meant for high net worth investors. But, not-so-rich investors can also get a slice of the real estate pie by investing in our funds, which give them an opportunity to participate in specific asset classes such as residential, commercial, hospitality etc. in a more concentrated manner. The nature of Ferrari Company is used in three fundamental ways. First, is to view it as a tangible asset, real estate constitutes the physical components of location and space., real estate is defined as the land and any built improvements permanently affixed on, or to, the land. Next, to denote the bundle of rights associated with the ownership and use of the physical characteristics of space and location constitutes the services that Ferrari provides to our users. The value of a bundle of rights is a function of the propertys physical, locational, and legal characteristics. The physical characteristics include the age, size, design, and construction quality of the structure, as well as the size, shape, and other natural features of the land. For residential property, the locational characteristics include convenience and access to places of employment, schools, shopping, health care facilities, and other places important to households. The location characteristics of commercial properties may involve visibility, access to customers, suppliers, and employees, or the availability of reliable data and communications infrastructure. The physical and location characteristics required to provide valuable real estate services vary significantly by property type. And finally, to refer our company to the industry, or business activities, related to the acquisition, operation, and disposition of the physical assets. Real estate creates jobs for many applicants, and is the source of high percentage of local government revenues. Our market activity is influenced by the activities and conditions that take place in three sectors of a market economy: the user market, the financial or capital market, and lastly, the government sector. Our company users compete in the market for location and space. Among the users are both renters and owners. The financial resources to acquire our assets are allocated in the capital market; hence, the equity (ownership) and debt investors are capital market participants. Government influences the activities of each of the participant groups through regulations, provisions of services and infrastructure, taxes, and various subsidies. Two primary characteristics of our company distinguish us from others: heterogeneity and immobility. Because of these two factors, the market for evaluating, producing, buying, selling, leasing, and managing real estate tends to be localized, highly segmented, and involves privately negotiated transactions.

Ferrari Real Estate Company

Year 1 Annual Report

Ferrari Statements Notes to Financial

Note 2. Significant Accounting Policies Statement of Compliance. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the Philippines. Measurement Basis. The accompanying financial statements are presented and prepared in Monopoly dollars under the historical cost convention. Accounting principles. The financial statements and accompanying notes to the financial statements for Ferrari Company are prepared in accordance with generally accepted accounting principles. Estimates and assumptions. Preparing financial statements requires management to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. The preparation of the financial statements in conformity with PFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances.. Although these estimates are based on Managements best knowledge of current events and actions, actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Judgments are made by management on the development, selection and disclosure of the Companys critical accounting policies and estimates and the application of these policies and estimates. Fiscal year. Ferrari Company operates on a thirteen month fiscal year. Revenue Recognition. Rental revenue is recognized over the duration of the lease term, inclusive of the rentfree periods. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Rent and Salary revenue is recognized when earned while rent and miscellaneous expenses are recognized when incurred. When a company lands on the property, rent revenue is recognized and must be paid accordingly. Also, salary revenue is also recognized as earned each time the company passes Go and the miscellaneous revenue is earned with regards to the scenario given in the chance and community chest cards. This is in accordance with the income recognition principle and the accrual basis of accounting. Expense Recognition. With regards to expenses, accrual basis governs the recognition of expenses when it is incurred. Each time a company lands on competitors properties, rent expense is recognized and must be paid accordingly. Miscellaneous expenses are also recognized immediately as expenses when incurred. Chance and

Ferrari Real Estate Company

Year 1 Annual Report

Ferrari Statements Notes to Financial

community chest cards either give revenue or expenses to be earned and incurred respectively by the company. Cost includes expenditure that is directly attributable to the acquisition of the property and buildings. Cash and Cash Equivalents. Cash and cash equivalents are carried in the balance sheets at cost. For the purpose of the cash flow statements, cash and cash equivalents consist of cash on hand . The company has a sizeable cash balance because the company didnt buy much properties. Still, the properties acquired during the year are enough for the business to earn a return from its properties purchased. Moreover, the company usually receives more cash from salary and rental revenue. Rental and miscellaneous expenses also result to an outflow. However, these rental payments are still low since the properties are still underdeveloped. Cash flows from operating activities, with a net amount of M 582, include cash receipts from revenue and payments to rentals. Investing activities which comprise of payments for purchases of properties are the major outflows that decrease the cash balance, amounting to M 920. With a beginning cash balance of M 1,500, cash flows result to an ending cash balance of M 1,162. Property and Buildings. Property and buildings are carried at cost less accumulated depreciation and any impairment in value. Initially, an item of property and equipment is measured at its cost, directly attributable costs of bringing the asset to working condition. With regards to depreciable properties, the useful lives and depreciation method are reviewed periodically to ensure that such useful lives and depreciation method are consistent with the expected pattern of economic benefits from those assets. When an asset is disposed of, the cost and accumulated depreciation and impairment losses, if any, are removed from the accounts and any resulting gain or loss arising from the retirement or disposal is credited to or charged against current operations. The company has bought 5 lands, namely St. James Place, New York Avenue, Indiana Avenue, Atlantic Avenue and Baltic Avenue for a total of M 920.00. Land is initially recognized at cost. Land is not a depreciable asset and the company has not yet developed any houses or hotels in the lands acquired. Therefore, no depreciation expense is recognized during the year. Trade and other Payables. Trade and other payables are current liabilities or short term obligations which are not discounted but measured, recorded and reported at their face amount. Income Taxes. Income tax on the profit or loss for the year is composed of current income tax. Income tax is recognized in the statements of income except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current income tax is the expected tax payable on the taxable income

Ferrari Real Estate Company

Year 1 Annual Report

Ferrari Statements Notes to Financial

10

for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Capital. This is the invested or paid-in capital. Capital is composed of the initial investments, amounting to M 1500, of the owners. Retained Earnings. Part of the shareholders equity, retained earnings represents the cumulative balance of periodic earnings, dividend distributions, fundamental errors and other capital adjustments. The retained earnings for year one comprise solely of net income, amounting to M 523.80. Rental Revenue. Rental revenue is recorded when earned. Rental revenue varies from property to property. Properties which are nearer to Go have sizeable returns compared to the properties past Go like the brown color group which gives small revenue but easy and inexpensive to develop. Rental Revenue of a property increases as more houses and buildings are being built on it. Nevertheless, the cost of developing a property also varies from low-cost to high-cost. Salary Revenue. Salary Revenue is recognized each time the company passes Go. One way in which the company earned salary revenue is through the chance or community chest cards when the manager has chosen a card which enables the company to advance to Go and collect M 100. Thus, Go is regarded as the point of recognition of Salary revenue. This is still in accordance with the accrual method of accounting since salary revenue is earned regardless of receipt of cash. 82% of the companys revenue comes from the Salary. Due to chance cards, the company advances to Go and collects its salary revenue. Thus, the company has earned a total of M 600 from Salary revenues and consequently, avoided paying from other players properties as a benefit of advancing to Go. Miscellaneous Revenue. Miscellaneous revenue is recorded when earned. Miscellaneous revenue results from chance or community chest cards. This can be receipt of dividend, collection of interest and other income which most of the time has small or average value. This results from peripheral operations of a business. Rent Expenses. Rental expense is recorded when incurred. Rental expense varies from property to property. Properties which are nearer to Go have sizeable rental payments like the Blue and Green property which gives the most expensive rental payments. Rental expenses incurred composed only of color group properties. No payment for railroads and utilities has been incurred during the year. Miscellaneous Expenses. Miscellaneous expense is recorded when incurred. Miscellaneous expense results from chance or community chest cards. This can be a mandatory payment to a competitor, hospital fees, speeding fees, tuition fees and the like. This results from peripheral operations of the business.

Ferrari Real Estate Company

Year 1 Annual Report

Ferrari Statements Notes to Financial

11

Provisions and Contingencies. The Company, in the ordinary course of business, sets up appropriate provisions for its present legal or constructive obligations in accordance with its policies on provisions and contingencies. Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense. Contingent liabilities are not recognized in the financial statements but are disclosed in the notes to financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed in the notes to financial statements when an inflow of economic benefits is probable. Note 3. Property and Buildings Property and buildings include the following: Land St. James Place New York Avenue Indiana Avenue Atlantic Avenue Baltic Avenue Total Cost Note 4. Trade and other Payables Trade and other Payables is composed solely of Income Tax Payable. Total Revenue Total Expenses Income before Tax Tax Rate Income Tax Payable M 730.00 148.00 582.00 10% M 58.20 Historical Cost M 180.00 200.00 220.00 260.00 60.00 M 920.00

Income tax on the profit for the year comprises current tax only. Current income tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantially enacted as of the balance sheet date, and any adjustment to tax payable in respect to previous years.

Ferrari Real Estate Company

Year 1 Annual Report

Ferrari Statements Notes to Financial

12

The amount of tax owed is computed by taking the amount of pre-tax income times the tax rate, according to the given tax rate of 10% for pre-tax income ranging from M0 to M1000. Note 5. Contingencies and Commitments The Ferrari Company received a Get-Out-of-Jail-Free card on turn 1/9. This card entitles the company to get out of jail without paying the fine, a M50 value. There is a reasonable probability that the company will receive this benefit in the future, but it depends upon (1) going to jail (a common risk of doing business, unfortunately) and (2) whether using the card to get out of jail is in the company's best interest.