FINACC 3 PAS, PFRS, APPENDIX:

Chapter 3:
PAS 1, paragraph 113, provides that an entity shall, as far as practicable, present notes in a
systematic manner.
PAS 1, paragraph 112, provides that the notes to financial statements are:
a. Present information about the basis of preparation of the financial statements and the
specific accounting polices used.
b. Disclose the information required by the Philippines Financial Reporting Standards that is
not presented in the financial statements.
c. Provide the additional information which is not presented in the financial statements but is
relevant to an understanding of the financial statements.
PAS 1, paragraph 16, provides that whose financial statements comply with Philippine Financial
Reporting Standards shall make an explicit and unreserved statement of such compliance in the
notes.
PAS 1, paragraph 122, provides that an entity shall disclose in the summary of significant
accounting policies the judgements that management has made in the process of applying
accounting policies and that have a significant effect on the accounts recognized in the financial
statements.
PAS 1, paragraph 125, provides that an entity shall disclose information about the assumptions it
makes about the future and other major sources of uncertainty at the end of reporting period
that have a significant risk resulting in a material adjustment to the carrying amount of assets
and liabilities within the next financial year.
PAS 1, paragraph 138, provides that an entity shall disclose the following:
a. The domicile and legal form of the entity, its country of incorporation and the address of
the registered office or the principal place of the business.
b. A description of nature of the entitys operations and its principal activities.
c. The name of the parent and the ultimate parent of the group.
PAS 137, provides that an entity shall disclose the following:
a. The amount of dividends proposed or declared before the financial statements were
authorized for issue but not recognized as distribution during the period and the related
amount per share.
b. The amount of any cumulative preference dividends not recognized.

Chapter 4:
PAS 24, paragraph 20, provides the following examples of related party transaction:
a.
b.
c.
d.
e.
f.
g.
h.

Purchase and sale of goods

Purchase and sale of property and other assets
Rendering or receiving services
Leases
Transfer of research and development
License agreement
Finance agreements, including loans and equity contributions in cash or kind.
Guarantee and collateral

i.

Settlement of liabilities on behalf of the entity or by the entity or by the entity on behalf of
the other party.

PAS 24, paragraph 12, requires disclosure of related party relationships where control exists
irrespective of whether there have been transactions between related parties.
PAS 24, paragraph 17, provides that if there have been transactions between related parties, an
entity shall disclose the nature of the related party relationships as well as information about the
transactions and outstanding balances necessary for an understanding of the financial
statements.
PAS 24, paragraph 16, provides that an entity shall disclose key management personnel
compensator in total and for each of the following categories:
a.
b.
c.
d.
e.

Short-term employee benefits

Postemployment benefits, for example, retirement pensions
Other long-term benefits
Termination benefits
Share based payment transactions, for example, share options

PAS 24, paragraph 3, requires disclosure of related party transactions and outstanding balances
in the separate financial statements of a parent, subsidiary, associate or venture.

Chapter 5:
PAS 10 paragraph 3 defines events after the reporting as those events, whether favorable or
unfavorable, that occur between the end of reporting period and the date on which the financial
statements are authorized for issue.
PAS 10 paragraph 17 provides that an entity shall disclose the date when the financial statement
are authorized for issue and who gave the authorization.

Chapter 6:
The amended PAS 1, paragraph 82A, provides that the other comprehensive income section shall
present line items for amounts of other comprehensive income in the period, classified by nature.
PAS 1, paragraph 81, provides that an entity has two options of presenting comprehensive
income, namely:
1. Two- statement approach
a. An income statement showing the components of profit or loss.
b. A statement of comprehensive income beginning with profit or loss as
shown in the
income statement plus or minus the components of other comprehensive income.
2. Singe statement approach
This is the combined statement showing the components of profit or loss and components
of other comprehensive income in a single statement of comprehensive income.
PAS 1, paragraph 88, provides that an entity shall recognize all items of income and expense
during a period in profit or loss unless a PFRS requires or permits otherwise.
PAS 1, paragraph 87 specifically mandates that an entity shall not present any items of income
and expense as extraordinary items, in the income statement or statement of comprehensive
income or in the notes.

PAS 1, paragraph 97, provides that when items of income and expenses are material, their
nature and amount shall be disclosed separately.
PAS 1, paragraph 98, provides the circumstances tat would give rise to the separate disclosure of
items of income and expense.
PAS 1, paragraph 82, provides that the line items in the statement of comprehensive income are:
a. Revenue
b. Gain or loss from de-recognition of financial asset measured at amortized cost as required
by PFRS 9.
c. Finance cost
d. Share of income or loss of associate and joint venture accounted for using the equity
method.
e. Income tax expense
f. A single amount comprising discontinued operations
g. Profit or loss for the period
h. Other comprehensive income
i. Comprehensive income for the period
PAS 1, paragraph99, provides that an entity shall present on the face of the income statement an
analysis of expenses using a classification based on either the function of expenses or their
nature within the entity, whichever provides information that is reliable and more relevant.
PAS 1, paragraph 105, simply states that because each method of presentation has merit for
different types of entities, management is required to select the presentation that is reliable and
more relevant.

Chapter 8:
PFRS 5 paragraph 6 provides that an noncurrent assets or disposal group is classifies as held for
sale if the carrying amount will be recovered principally through a sale transaction rather than
continuing use.
PFRS 5 paragraph 15 provides that an entity shall measure a noncurrent asset or disposal group
classified as held for sale at the lower of carrying amount of fair value less of cost of disposal.
PFRS 5 paragraph 25 further provides that a noncurrent asset classified as held doe sale shall not
be depreciated.
PFRS 5 paragraph 21 provides that an entity shall recognize a gain but not in excess of any
impairment loss previously recognized.
PFRS 5 paragraph 18 provides that when an entity adopts the revalued to fair value immediately
prior to the classification as held for sale.
PFRS 5 paragraph 13 provides that an entity shall not classify as held for sake a noncurrent asset
or disposal group that is to be abandoned.
PFRS 5 paragraph 14 provides that an entity shall not account for a noncurrent asset that has
been temporarily taken out of use if it had been abandoned.
PFRS 5 paragraph 27 provides that the entity shall measure the noncurrent asset that causes to
be classified as held for sale at lower of
a. Carrying amount before the asset was classified as held for sale adjusted for any
depreciation or amortization that would have been recognized if the asset had not been
classified as held for sale.

b. Recoverable amount at the date of the subsequent decision not to sell.

PFRS 5 paragraph 28 provides states that any adjustment to the carrying amount of a noncurrent
asset that ceases to be classified as held for sale should be included in profit or loss
PFRS 5 paragraph 3 provides that assets classifies as noncurrent in accordance with PAS 1 shall
not be reclassified as current as held for sale.
PFRS 5 paragraph 38 provides that id the noncurrent asset is a disposal group classified as held
for sale, the assets and liabilities of the group shall be presented separately and cannot be offset
as a single amount.

Chapter 9:
Appendix A of PFRS 5, a discontinued operation defined as a component of an entity that either
has been disposed of or is classified as held for sale and:
a. Represents a separate major line of business or geographical area of operations
b. Is part of a single co-ordinated plan to dispose of a separate major line of business or
geographical area of operations
c. Is a subsidiary acquired exclusively with a view to resale.
PFRS 5 paragraph 12 prohibits the retroactive classification as a discontinued operation when the
discontinued criteria are met after the end of reporting period.
PFRS 5 paragraph 33 provides that an entity shall disclose a single amount comprising the total
of post-tax profit or loss of the discontinued operation and the post-tax gain or loss recognized
on the measurement to fair value less to cost of disposal or on the disposal of the assets or
disposal group constituting the discontinued operation.
PFRS 5 paragraph 34 provides that if a disposal group is classified as held for sale in the current
year, the results of the disposal group for prior period shall be re-presented as relating to
discontinued operation in the comparative figures for the current years income statement.
PFRS 5, paragraph 38, provides that an entity shall also present separately on the face of the
statement of financial position the following information:
a. Assets of the component held for sale separately from all other assets.
b. Assets of the component held for sale are measured at the lower of fair value less to cost
of disposal and their carrying amount.
c. Liabilities of the component separately from all other liabilities
d. Non-depreciation noncurrent assets of the component held for sale shall not be
depreciated.
PFRS 5 paragraph 3 provides that the assets of the component shall be presented as a single
amount under current assets and the liabilities of the component shall be presented as single
amount under current liabilities.
PFRS 5 paragraph 40 further provides that if a disposal group is classified as held for sale in the
current year, an entity shall not reclassify or re-present the assets and liabilities of the disposal
group for the prior period to reflect the held for sale classification in the statement of financial
position as of the end of the current reporting period.
PFRS 5 paragraph 33 provides that the net cash flows attributable to the operating, investing and
financing activities of a discontinued operation shall be separately presented in the statement of
cash flows or disclosed in the notes.

PRFS 5 paragraph 13 prohibits noncurrent assets that will be abandoned from being classified as
held for sale.

Chapter 10:
PAS 8 has identified two main categories of accounting changes, namely:
a. Change in accounting estimate
b. Change in accounting policy
PAS 8, paragraph 5 defines a change in accounting estimate as an adjustment of the carrying
amount of an asset or a liabilities or the amount the periodic consumption of an asset that
results from the assessment of the present status and expected future benefits and obligation
associated with the asset and liability.
PAS 16, paragraph 61 provides that the depreciation method shall be reviewed at least at each
financial year-end and if there has been a significant change in the expected pattern of
consumption of the future economic benefits embodied in an asset, the method shall be changed
to reflect the changed pattern and such change shall be accounted for as a change in accounting
estimate
PAS 8, paragraph 22 that an entity shall adjust the opening balance of each affected components
of equity for the earliest prior period presented and the comparative amount disclosed for each
prior period presented as if the new policy had always been applied.
PAS 8, paragraph 10 provides that on the absence of an accounting standard that specifically
applies to a transaction or event, management shall us judgement in selecting and applying an
accounting policy that results in information that is relevant to the economic decision making
needs of users and faithfully represented.
PAS 8, paragraph 11 and 12 specify the following hierarchy of guidance which management may
use when selecting accounting policies in such circumstances:
a. Requirements of current standards dealing with similar matters
b. Definition recognition criteria and measurement concepts for assets, liabilities, income and
expenses in the Conceptual Framework for Financial Reporting.
c. Most recent pronouncements of other standards-setting bodies that use a similar
Conceptual Framework, other accounting literature and accepted industry practices.

Chapter 11:
PAS 34 prescribes the minimum content of an interim financial report and the principles for
recognition and measurement in complete or condenses financial statements for an interim
period
PAS 34 does not mandate which entities are required to publish interim financial reports, how
frequently, or how soon after the end of an interim period.
PAS 34 on interim financial reporting does not mention about the two views. Essentially, the
standard adopts a mix of the integral and independent views.
PAS 34, paragraph 8, provided that an interim financial report shall include, at a minimum, the
following components:

a.
b.
c.
d.
e.

Condensed statement of financial position

Condensed statement of comprehensive income
Condensed statement of changes in equity
Condensed statement of cash flows
Selected explanatory notes

PAS 8A Provides that an entity can present items of profit or loss in a separate condensed income
statement.
PAS 34, paragraph 19, provides that is an entitys interim financial report is in compliance with
Philippine Financial Reporting Standards, such fact shall be disclosed.
PAS 34 paragraph 28, provides that an entity shall apply the same accounting policies in the
interim financial statements as are applies in the annual financial statements.
PAS 34, paragraph 21, provides that if the business is seasonal, in addition to the current interim
period financial statements, the entity in encouraged to disclose financial information:
a. For the latest 12 months
b. Comparative information for the prior comparable 12 month period
Paragraph 25 of Appendix B of PAS 34 provides that inventories are measured for interim
financial reporting by the same principles as at financial year-end.
PAS 34, paragraph 17, requires disclosure of the writedown of inventories to net realizable value
and the reversal of such writedown in a later interim period.
Paragraph 12 of Appendix B of PAS 34 states that the interim period income tax expense is
accrued using the annual effective income tax rate applied to the pretax income of the interim
period.
Paragraph 17 of Appendix B of PAS 34 states that the income measured using separate effective
tax rates for each of the tax years applied to the portion of pretax income earned in each those
tax years.

Chapter 12:
PFRS 8 now sets out the requirements for disclosure of information about operating segments.
PFRS 8 shall apply to the separate or individual financial statements of an entity, and to the
consolidated financial statements of a group with a parent:
a. Whose debt or equity instruments are traded in a public market.
b. That files or is in the process of filling the consolidates financial statements with a
securities commission or any class of instruments in a public market.
PFRS 8 has abandoned the risks and rewards approach of identity operations by business
segments and geographical segments.
PFRS 8 simply states that the amount of segment revenue and segment expense shall be the
measure reported to the chief operating decision maker.
PFRS 8 paragraph 24 provided that segment assets such as deferred tax assets, postemployment
benefits assets, financial instruments, and rights arising under insurance contracts are not
required to be disclosed.

Chapter 16:
PAS 7, paragraph 7, provides that an investment normally qualifies as a cash equivalent only
when it has a short maturity of three months or less from date of acquisition.
PAS 7, paragraph 15, provides that cash flows arising from the purchase and sale of dealing or
trading securities are classified as operating activities.
PAS 7, paragraph 43, provide that investing and financing transactions that do not require use of
cash or cash equivalents shall be excluded from the statement of cash flows.
PAS 7, paragraph 33, provides that interest paid and interest received shall be classified as
operating cash flows because they enter into the determination of net income or loss.
PAS 7, paragraph 33, provides that dividend received shall be classified as operating cash flow
because it enters into thee determination of net income.
PAS 7, paragraph 34, provides that dividend paid shall be classified as financing cash flow
because it is a cost of obtaining financial resources.
PAS 7, paragraph 35, provides that cash flows arising from income taxes shall be separately
disclosed as cash flows from operating activities unless they can be specifically identified with
investing and financing activities.
PAS 7, paragraph 18, provides that an entity shall report cash flows from operating activities
using either the direct method or indirect method.
PAS 7, paragraph 32, provides that interest paid is disclosed separately whether it has been
recognized in profit or loss or capitalized.
PAS 7, paragraph 35, provides that income tax paid is also disclosed or presented separately.
PAS 7, paragraph 19, provides that entities are encouraged to report cash flows from operating
activities using the direct method.
PAS 7, paragraph 21, provides that an entity shall report separately major classes of gross cash
receipts and gross cash payments arising from investing and financing activities using the direct
method.