conceptual framework of acctg
TRANSCRIPT
7/21/2019 Conceptual Framework of Acctg
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- 1&"'Reuzn
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4
LECTUREOTES
' . t
-
-
THe
oilcepTuAl
nanewonxp'Accour{Tmc
Or.o
ftnsoil)
.
1. The Conceptual
Framework
deals
with the
conceptsused in the
preparation
and
presentation
f financial
statemenfs
(FS).
t
2.
rfte
COnieptudf
ramework is
not
a
PFRS1;t
does
not
define stadOarits or
any
pirticutar
measurement
or.
disclosure
ssue. Nothing. n
the
Framework
oyerrides
any specific PFRS.
n
case
of
conflict,
PFRS
prbvails
over
the Frarnework.
3.
ihe
prrpose
of
the
Framework
s to:
A) Assist
FRSCa
n
developing
GAAPand
its
review
and
adoption
of exi,stin Internationaf FinrnCial
ReportingStandards
IFRS)
B) Assist
preparers
of
FS iri
applying
FFRS
C) Assist auditors
in
forming
an
opinion
as to
whether
FS
conforrns
o GAAP
D)
Assist
users
n interpreting
he FS
E)
Provide interested
partt'es
with information
cbout
PFRS
iormulation
by FRSC
4.
The scope'of he
Conceptual
Frarnework overc
the fotlowing:
A)
C
APITAL
CONCEPTS:
he concept
of capitd and
capital maintenance
B) q FJECIIVE: the obFive of financial statements
C)
(l
UALITATIVECHARACTERISITICS:
he
gualities
or
attrib.ut€s
h&t make FS
useful
to the users.
D)
E
LEI"IENTS:
be definition,
recogfiition
and'measurement
of
the elem€nts of
FS
5.
]rre
obigqtivo
of FS is
to
provide
information
about
ttre
t?nan</at
Nsitidt3,
pertarmance
arvd
chalrges
n
fimncial
po.siHon
f an erttity
that
13
qseful
to.a
yride
ranlt"
of
users
in
m*king
Gconomic
dcc*s&urs,
The
FS
also
shqirs'the
res4ts
of the stewardshp
of
nrcnagoment
--
ihe
accour*tt*lity'of
rfran{lbrncnt
for
the
resouruts
entrtrited to it; the rnanagrelfl€rt
sf afi
entity has
the
primary
responsibility
for
the
preparattotl
6nd
pf€sertAtion'of
FS,
6.
The fraflt€fvof,k s
concemed with
general-purpx
flnancirat
statements
(lncludlrE
conrolidated financial
sraEmentt) of all
commercial,
industrial
and
Ousiness
eporting
public
or
priveC
kftics
7.
9'
Sp€rra,
g.rp*.frnanciaf
repofts
(e.9.,
prospecttrses
ald
computations
prepail$d
bf
tatatim?tr?oses)
sru' ur*Sld?',t{ie-#,oiffi..&H$l0r{(
rxnr<r
0r
S
Uh.thr
{*d mldr,,t
h
Cdl.
*hn-
Jf
)ecirrat-Aasn
l)+*riqelinircdE;.
i
4;
".
potentifi
Vwestors @, etffi *tt fr*
.
pREs$ff*ffi{
{9.r-**.f:-g.Ttp
(compraoit;*y
'\,{g: icorrsFtency
is-the
meanso achierc
hir
god}
l-
U
+
ttrtttcrgndabillty:
cwnpliarrce is' PFRS
o n+elc flforrfirtidh
qnd€rstmdablc
o'userE
coilrE
r
prin'dry)
{
*r:ji5:ffi
il,
??,ffi
#:"'.,"ffi
W"'"'.m#
Jffi"ffi*
;
srr
eteness
11. ConstralnB ofl rctevant and reliable informationl (1)
On tinrelinef:
if
th€r6
is
undu6
frlay
in
the
r.eporting
of intbnrration, it
may lose its relevance
(2)
On
cast-benefit:
the ben€ffts
de*vbO
from
informdttt"t
sttould.exqecd
ttre ctst d
providlrg
it
(3)'On
eu#/ftttttivi
ctrrnrcfsr?stkg: the
aim
is
to
acttfeve'di tpropriOte baftanccenrong the chractcrBtiG
in
or,Str
to'fiie€t tfte'au,jecfiVri
of FS.
Lz.Informati6n
is nartwial
ff
its
Omissjon
or misstrtement
euuu tnfir*nse
ecortomic
d€cigioftS of users
tak€n on tlie ti&3i3'o#
thc
ffnarcial
statemefits. t4steriality
provides
a threshcild or
crit'off
point
rather
than being a prlmfry qrtHtatlve cfiaracteristic whhh information must have if it is to be useful.
'
13. The
plcmqrtr
of
FS:
.
Cht-frnarrciat
osition:
(1)
Assets
(2)
Liaillit,r;s
(3)
Equity
.
Oh Msr''luficc:
(4)
Incorre
(indudes
revenue
efid
06ifrs)
(5)
fxpenge
{include
losses)
14.
An item
that rf€e'ts
th€ definationof an ekrnent
should
W
rxognized
rf:
A)
FROS*B{-F: t is
prabaile
that any future
economic
bsnefit associated
with
the item will flow to
or
fom
Urc stity,
and
i
B)
MfASURAaLE: te
item
h* I cost
or
vafue that
cbn
*
measu/ed
xith reliabitity. Foar
diffirent
measur€ment
bases are us€d to
rn€asure
he
Qlements.of
F5:
(1),Historireal
ost
(2)
current
cost
(3)
Redizable value
(4)
Presentvalue
aN
otler tade
ctec*torg
(5)
alstor[rs
tG)
15.'Two
ceplH,,conccFtt: 1)
cost'basis).
The
concepl of
(tno6t
coqmon) and
2)
f/rvg&af
cenrept.(gseq.:ctirrrent
prwides
the
llnkage between
th€ concepts
of capital
and
concepts
of
profit
since
it
providesthe point
of referen'ee
by
which
profit,
s rpeasured.
Based n
PAS
.
paragraph
,
the ecm PFRS'
Philippine
inancial
eporting
tandards)
hallbe composedf(a)
ppns
(b)
PhilippineAccounting
Standards
PAS),
and
c)
Interpretations
f PAS
and PFRS.
See
page
0
of
TA
Lecture
Notes)
FRSC
Fin6ncial
Reporting
tandards
ouncil) eplaces
SC
Accounting
tandards ouncil).
FRSC ssues
FRS
while
ASC in tfu
pas
ssued
what
used
o be calledas
"SFAS"
(Stdtements
f Financial
Accounting
Standards);
FAS were
previously
upersededy PAS,which
eventually volved nto PFRS.
PFRS s
now
he mainsource f
GAAP
(Generatly
Accepted
ccountingPrinciples)
tr
he Philippines.
The'financial
osition
f
anentity
s
aft'ectedy the
economicesources
t
controls,ts inancial
tructure.ts
tiquiAity na
Solvency,
nd ts capacity
o adapt hangesn theenvironment
n which
he
entityoperates.
*
*
7/21/2019 Conceptual Framework of Acctg
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,
"=TTTre*=l*"
TI-IEORY f
ACCOUNTS
L'.CTIJRHOT'llS
Txe
CoucrpruAL
nnuewonK
oR NANqALeponnrc2010
1.
The
Conceptudt
ramework
or
Financial.Reporting
010
(a.k.a.
"IFRS
Frarnework')
was approved
by
the International
Accounting
tandards
Board
IASB)
n September
2010.
2. The IFRSFramework ddresseshe
following:
C0QE
The
objectivesof
financial
eporting5
.
The reportingentityT
>' .
The
definition,
recognitionand measurem.ent f the elements
rom
which FS
ar€
constructed
r
COSTconstraint.
Financial
epofting imposes
costs;
it is
important that
benefits of
financi-al eporting
should
ustify
those
costs
.
4. GOING CONCERN
ssurnption.
"Going
concern"
presumes
that an entity will,
continue
its operation
indefinitely
or,
if that
presumption
s not valid, disclosure
and a different
basis of
feporting
are required;
"Acciual
ba$s'is
fiientioned n
the
new ramework n the
sectionon'obiectives
of
financial eporting.'
PAS
:
PRESENTATKTIf
F
FnnncntStmgmexrs
1. COTyFONENTS
F
FINANCIAL TATEMEIIITS
FS).
A complete
set
of
FS
s
cbmposedof:
'
VA)
.statern€nt
of
financial
position
(Dalancg,lbgt)
- as
at the end of the
period
/A)
Staternentof
finar
.'z
B)
Statement
of
com incomeE for the
period
,
C) Statement
of
/
D) Statement of
7tt?il'tiboMF.l\ITAl
quattrarive
haracterisrics:
AiJfirj
.
ou::"
l.*elwafice(fngredicntr(p*die&xex8hr,/cenflNnbkxyalue)+/
. t-2
:tr|ourt
F''
,2.
i
it{"i
n
wAi'
;
;?ru;;ffi
;;'"dffi
*'",
ne ertiy,
reeuonf*bnn
"u
n
I
.
Wr#
r
ENHANCfNqualitativecharacteristics,
tuur)
.
f
l.
Conparabiliry
2.
verifiabtlity
3. Timeliness
a.
Unae*ftffifr#i
.9v. rt l tvru.Fr. t l t
-.
r. r. l , tu. rrt t . )/
-r.
, . r. t . . . f tc , t . r
-.
u.u9roawMutt t r,af
'
NOTE: Matsridiry is
an
entlty-spcrci{icaspect of
relevonce based
on
the
nature
and magnitude, or both, of thc items to
which.irfonnrtion refatesn
$*te
ont€xtof an ndividualentity's inancial epor-t.
-
for
the
period
entlbr
appllg; an accounting
poliqy
retrosp,itivetrie
or
makcs
a
retrospective
estatffiTG
i tems in i ts FS.
--------:-
a
While
dre
ConceptualFramework l '2010
(ncw
vc.mion)
was already
overcd in the October'2O12 May 2013 CPA
LicensureExaminaiions, he old
version
of
ConceptualFramewott
indicatedon page I was
still
givcn
in
the
saidexains;
t
is therefioremperative o
have
an
idea
of
both ve*ions.
particularly
on their similarities
and differences.
5
lhg objective
of
financial
reporting
s.to
Brovide
inancial
nformation
about he reponing entity thar is
useful
to,exisling
fid
paJgnlja 'tnvestat;.lbnders
nd othel
credtls
in making
decisions bout
providing
resources
o the
cntity.
u@uW4dim'c'hi t rucier ist icsofusef i r | f inancia| informat ionaredividedintotwo(2)
7
8
,
This
is
a
new tem ihcluded n the
scope
of
t'lre
Cgiceptudl Frailtewdrk'2010,
he details
ofqyhich are
still.pendiry
(i.e.,
work-in-process)
a*d
on an exisringexposuie raft oi thechapter
ti
"&PIi$& g
"
-*
l'he
tenn
Como'rehensive
ncome" efers o all chanses
n
eqirity.exced
thoie re-sultins
rom conhibutions
rom and
-
istributiono owners; ence,
heStalementf CompreFensivencomc
hafl
nclude
wo
(2)
major
categories:
l.
ComooRents
fpro& or /<r.r's hese re
ncome
ndexpcnse ccounts
sually ound n the raditional
nctomc'
tt"t"*"rtAsaniff iEquirertrent,thelineitemstobepresenteclare:1PAS
.par.82)
Y Revenue
j
Financecosts
\F.}
Slare
n
tt$
ihcsfiE
or lossof
associates
nd
oint
venture ccounted
or
using
he
equity
gethocl
y'
Taxexpens
-*/
Post-tax
rofit
trr lms
on discontiEuedperationE
.f
l>rofit
r
loss
2,
Comportentsf
other campreherxivencome theseare nconre
nd expense
cc{xntsnot recognizcd
n
proiit
or k:ss
andareusually equired y PFRS o be
recognized
irectly n
theequity
section f thestatementf financial
xrsition
(tralance
heet). xamplcs
nclude:
PAS
,
par.
7)
{
t]rycali'ed
gain
or
loss-on
ygi.lgu$$r-:TlS
ecurities
PAS
39)iltrtrfffot
y'
Gain
or loss
rom ranslatirfi'iFffi;-i6rcAtettrsnts
fa
foreign
peratibn?PAs
l)
t'
Ctungen
ggvaluatiqrl.qqplus-(PAS
6
and 8)
rX:fi fi fi :'"Tff"::HT[ff,*;r':i:#ri*H,ts"(PAsie)
f
Afiqnfiblgein
of:klqS
n.dcfined enefil
cnsion
lans
PAS
19,phr.9'fA)
r@
An entity as wooptions-of
resenting
orylprehc.nsivc
ncome:
PAS
,
par.
8l)
comprehensive
ncome.
Option
:'l"WOSTA'IEMENTS
i
statement
f
as
shown in
thc
incori lcstatemenf
lus
or
Option l : SINGLE STA'IEMENT
;
i..rl
; ,
r
The
componentsol'pioJit or lossand Cornporientsof lhcr tnmprchensit,e
fi(:omcare
shown
in
a single
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2. HEADINGS ND TIfLES.
An
entity
may use other
titJes
or
the statFments
other than those used
in
PFRS
nd shall
present
with
equal
prominence
ll
of
the FS
and
distinguish hem
from
other
information
in
the
same
published
ocument.
In
addition,
he following
nformation
hall be
displayed
rominently:
A) The narneof
reportinqentrfy
.
B)
Whether
he
financial
tatements over he
individual
ntity
or a
group
of entities
.
C)
The
date at
the end of
reporting
period
or
the,
period
covered
Oi-theEt of
financial
statements
D)
The.presentation urrency
as
defined
n PAS
21)
E)
The level
of
rounding
(also
known,as
tru"ncdtion')
used in
presenting
ainounts n the FS
3. GENERAL EATURESn presentingFS.
'.
FAIR PRESENTATION,
inancial statements
shall
present
fairly
the
financial
position,
financial
performance
and cash'flows of an entity.
The
application$f PFRS
s
presumed
to result in
FS that
achieve
a fair
presentation.
FS that
comply.
with PFRS
hould include in
the
notes
to
FS
an explicit
and unreserved
tatementof
such cornptiance.l0
.
GOING
CONCERN.
An entity
shall
prepare
FS
on a
going
concernbasisunless
management
either.
intends
o
liquidate he entity or to cea$e rading, or
has
no
realistic alternative
but to do so.
.
ACCRUAIjASIS
OF ACCOIJNTING. n entitv
ghall
prepare
its FS,
F[ceft
fgr
cEstfloyu- nformation,
-----
sing
he accrualbasisof accounting.
r
.
MATERIALIfi
and AGGREGATION.
n
ent'jy.
slpl trEgse,nt
Xqets €ly
each material chqs of similar
items
and shall
present
separately
tems
of dissimilarnaturb
or fundtionlnlesg-they
re
immate 'ial.
.
oFFSETTING.
An entity strall not
olt$et assets and
fiabintfes
or
inc6ffXffi-n'ffiiEss
offsetting
is required
or
permitted
by PfRS.
'
.
COMPARATIVENFORMATION.
n
entiW
shall
disclose comparative
information
in
respect
of
the' previous period forall
amounts
reported in
the current
period's
FS
and shall
include
comparative
information for narrativ€ artd desfrptive information
when
it'is
relevant
to an understanding he
current
period
FS.
r
FREQUENCY
F REPORTING.
n
entity shall
present
a complete
set of
FS
at
leatt
annually. When
an
entity
prb$ents
FS or
a
period
bnger or silmrter
han one
yser,
an entity
shall
disclose:
(A)
the
period
eoveredby
the
FS
'
(B)
the
reasons for
using a
long€r
or Sfiorter
period,
and
(C)
the
fact
that comparative
amounts
fsr FS
are
not
entirely comparable.
.
CONSISTENCf
Of
PRESENTATION.n
entity
shall
retaln
the
preientation
and classification f items
in
the
FS
rom one'period
o the
next
unless:
(A)
it
Js
ap?arent,
following
a cfxing€ in
the
nature
of
the
entity's
operations or
a
review
of its
.
Fs,-that@e*1t*a;Mttbernorc.4prepiate;
sr
-
r-.
-*
.-
-.
*
(B)
a specific
PFRS eqrrires
a change in
prafcntation.
4. INCOMESTATEMENT RESENTATIOII.Whcn itt'm d ircome and expense are material,
disclose their nature
and
amount
gePr,tteFt.
ln addition,
an entity
shall
present
expenses uSing a
classificatlonbased
on
eitlrer
(L)
nature
of
expnse method
or
expensetl fiethod,
whictever
provides
r.nore eliable
and
releyant
ifrfoffnation.
ReSA
-7ip
Re//ie&Sc/44o(
{
4ca*ttaru1
T[{fiORYof ACCOUN'I'S
.UC"IIJRE
OTtiS
An
entity s-halt lassifyall other
liabilities
as
non-cuirent.
' " . * ,
Page
an entity rhril
*r anatysis of
(2)
furrtton
d
. ..r ,-.
a
5. Ef,'fRAOftDtilARY
TEMS. An
entity shall not
present
any
incorne
ff
exp€fls,e,aE xtraordinary items, in
the
staternent.
of compreherBive income,
or
separate
income
staternent
(if p.reser*e'O).
r
in
the
notes
to the fu|arrcial
stdterfienB.
rit
6.
BALA$fCE
SHEfT
(BS)
PftESENTATION, An
entity elt6t{
pres€nt
current and
noa-current
a$cts,
and,
curreht'and noh-anrrcnf
liabiRies,
except
when
a
pi€sentation
besed
on liquidity
provides
more
retisle
and relevant'infbrmatldn;
When this
ex€€Btfron pfies, all
assets and
llabilities
shalf be
presented
broady
in
order of
ffuictity.
7. CURRENT s: NOfTCURRENTSSfTS. An
erttlty ihttl
cfalsiry an
asset
as
current when:
A)
Tiie
asset
ts
a
9'sh
or caeh equivalent
{u#rla
restricted
for
at
least
12
months
after
BS
date)
B) It
|olds
th€ a6st
pritnarily
or
the
purpose
of
trading
C) It ixpects to paliee th€ asset within 12 mrln*hs after the report+ngpertod (BS date)
D)
It
gxpects
oritgnds
to
realize
or cofi$rfile
it
within
the entity's normal
operating cyclelz
An ertity
ghalt
C*assifralf other assets
as
non:eurrcnt.
8. CURRENT
s. l$Ot{CLTftRtfSTIABILITI€S. An
entity shalt
classiff a
liabifity
as
current
when:
A) The
liabilfty s
due'to
be settled
within
12 months
after the
reporting'period
(BS
date)
B)
It holds'the iability
primarity
or
the
purpose
of trading
C) It'expects to
settle
the
liability
within the
entity's
normal
operating cycte
D) The
entity
gggg^WJ
twelvemonths
fter
.@gq$ Iqllgferjett@t
of the liability
or
at
least
tne
reporung
enoo
t
5
oate).
I
-
lu
*t t
t2
Retrospective pplicationof a chairge
n
accounting
policy
is
coveredby PAS E.
(See
page6 of TA l.,ecture otes)
lnappropriate acCounting
policies
are not rectified
either
bry
disclosure
of
the
accounting
policies
used
;or
by
explanatory.notes.
PAS
l,
par.
l8)
An entiry thal uses
he function of
expensemethod
a.k.a._'cost
f'sales' method)
shall disclose
addirional nformation on
the
Hgj:,gl91lg55,
meludingglepreciatg and
amortization expense
and employeebenelits
expense.
PAS
l.:par
104)
The operating
cye e
of an
entity
is the time between
he
acquisitionof assets
or
processing
nd their realization n
cashor
cash
equivalents.When the
cntity's
qormal
operating
cycle is not
clearly
identifiable,
ts
duration
s
assumed
o bie welye
months.
PAS
I,
par.68)
t
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of ACCOUNTS
ECTTJRE
OTES
g.
BALANCE
HEET
INE
1TEMS
As
a minimurn
requirement,
he
face
bf
the staternent
of
financial
positlon
shall
nclude
ine
tems
hat
present
he
following
amounts;
A)
ProPertY,
lant
and
equipment
B)
Irwestment
ProPertY"
-i
Intangible
assets
O)
finaniial
assetsta
excluding mounts
shown
under
E,
H
and
I)
Ei
Investments
accsunted
or using
he
eguity
method
..
Fi Biological ssets
defined
as
"living
animals
or
plants"
under
PAS
41)
G) lnventories
H)
Tiade and
other
receivables
j]
fffj'3:S. :*ffil1i:,?t?incrudine
ssetsr
disposar
roups
erd
orsare
nder
FRs)
K)
Trade
and
other
Payabtes
'
t-j
provisions
defined as
"liabilities
of
uncertain
iming
or amount"
under
PAS
37)
M;
financtal
liabilitiesl5
excludingarnounts
shown
under
K
and
L)
N)
Liabilit ies
nd
assets
or
current
ax
--
_L^, _^ _
Oi
Oeferred
ax
liabilities
and
deferredtax
assets,
not
to
be
presented
as
curent
(PAS
1,
par.
56)
P) Non-contiolling
(minority)
interest,
presented
within
equityt6
e)
Issued
capital
and
reserves
attlibutabfe
to
equity
hoHers
of
the
parent
10.
FINANCIAL
IABILITIES.
An
entity
classifies'its
inancial
liabilities
as currcnt
when they
are
due to
be
settled
within
twelve
months
after
the bdlance
sheet
date,
even if:
----At
ihe originalterm was for a period ongerthbn twelve months; and
L^-:- r-
-^_^,a|:r
,
B)
An agtreem€nt
o
refinance,
or
to
reschedule
payments,
on
a
long-term
basis
is
completed
after
tne
ripOrting
poi"A
tAS
date)
and before
the
FS are authorized
fsr
i8sue17.
11. EFFECTS
F
6REACHLS.
when
an
entity
breaches
a
provision
of a
long-term
loan
agreem€flt
oft'or
before
the
end
of
rcporting
period
(BS
date)
with
the
effect
that the
liabitity becomes
paytble
on
demand,
the
tiability
i
ctassirieo
as
current,
even
if
the
lender has agreed
not
to
demand
payment
as
a
consequence
f the
breachl8.
12. STATEIVtENT
F CHANGES
.eQutw
(SCE).
An entlty shall
present
a S€E
showirqg:
.. .. .
-- -
nl iot"f
-.smpretrensive
inc}me
fbr
the
period,
showlng
separat{*y"the
total
arnounts
attributed
to
,owrlers
of the
parent
and
to
non-controlling
(minority) interest
B)
F;;".h
co1nirbn"nt
of
eguity,
the
efrects
of
retrospective
apptication/restatement
under
PAS 8.
Ci
The
arn-ount
of
transactions
with
owners
in
their'capaclty
as
ownef€'
show'ing
separately
contributions
by and
distributions
o owners'
D) For e"n ao*d."*t cf,.equfty, e-ffGdfFffEtftRt 0f ttte
bGn|Y6e*
tha
carrying
afnount
gt
thc
-'
ueeinnrb
ard'tfre'endof
the
*rrts6;
6ffrs*l|'t'ctt
'd}'ngF
soprratcly'
13.
DIvIDE|6B.
n,ientitv
shall
present'citl€r
in
the
stiternent
of
changes
in equity
or
in the
not'es,
tfic
amount
of
dividends
recognizeA
ds
distributions
to
owners
and
the
refoted amount
per
shar6.
14.
NOiaa'TO
THE
FS.
The
notes
are
normatly
presented
in'the following
ddar,
which
assists
users
in
understanding
the
F5 and
comparin$
them
with
F5 of other
entities:
A)
A
statement
of
compfftance
with
PFRS
gi
A SrJmmary
of significant
accounting
pdictos
apfri€dre,'wtrtch
*hall
iricll#:
> f;1g
pther
accounting
policies
used that
are
relevant to
an understanding
of
the
FS
c)
supgo*rng
inrormation
ror
-ttems
shown
on
the
face of eeich
Fs, in th€
older
in
which each
stadement
6fld
each
line
ttem
is'presentdd
D)
Other
disc{osrtts,
irrclutting:
An investment
roperty s a
property
land
or building)
held
by
the
owner
or
by the
lessee ndet
a finance
ease
o
earn
rentals
or
for capihl
appreciafoon
r
6oin, rather
than
or
use
tr sale.
(PAS
'f0)
A financial
*rit
i..
any asset hat
is cish,
an
equity
mtrument
of another
entity,
p
contractual
ight
to redeive
ash
or
another inancial
asset
om
another
ntity'
(PAS
32)
A financial
iabitity
is rny
liability
that
is-a
contrrctual
obligation
o
deliver
cashor another
inancial
asset
o anotfier
entity.
PAS
32)
Non-conholling
nterests
previouslyknswn
ae
minority
irtelesr)
:EX
h
presentd in the
consolidated
alancri
heet
wlitrinequity,seperatelyfromthe'parentshareholders'eQuity.(PAS27'par,21)
lf an entity
oxpects,
nd
has
the'rliscretion,
o refmance
r
mll over
an obligation
or &t,
east
lvelve
m|-nth|
after
the
uulun.":jn"rtdateunder n exiiting oan,
aciliry,
t classifies
he
obligation
snon-currenl,
ven
f it would
otherwise
e
due
within
a $horter
ericd.
PAS
,
par-73)
The
f ability
is classified
s
nofi-currenr
f
the
ender
agreed
y
the balance
heet ate
o
provide
a,grlce
period end.ing
t
least
12months
after he
balance
heet
ate,
within
which
he
entity
can
ectifu he breach
nd
during
wbich he
tender
cannot
emand
mmediate
ayment.
PAS
.
par.
75)
An
entity
is
required
o disclose
the
udgment^r
hat
management
as
made
1
ttry.
pro€:ss
of applying
the,
mtity's
accountiig
olicies
nd
hat
have
he
most
ignificant
effect
on
theamounts
ecognized
rr
he
FS.
PAl
I'
par.
122\
.Jn
addition,
he
notes
shall
contain
key
assimptionr
conceming
he
future and
other
\e
sourees
f es-limation
hat
will
por*
u significant
isk
qf
causing
a material
adjustment
o the amounl
of asset's nd
iabifities
withih
the
next
period.
n
andother
details
fsuch
assets nd
iabilities.
PAS
,
par.
125)
t3
l4
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5
THEOI{Y
f
ACCOUNTS ECTURE OTF,S
.,
t
. .
r-
PA'S
:
Accouxnnc
orlcms,xaneesAccounTrnc
snmEres8
nnOhs
.
OBJECTIVE.
he
objective
of
PAS
8
is
to
prescribe
the
criteria
for
selecting and changihg ACCOUNTING
POLICIES,2o hanges
in ACCOUNTING
STIMATES
nd CORRECTION
F ERRORS
o enhance
relevance;
reliability
nil comparability
f
FS
of an entity over time
as well
as
with
FS
of other entities,
.
SELECIION OF
ACCOUNTING
POLICIES.
When a
standard
specifically applies
to a transaction,. the
accounting
policy
applied
to
an affected
account shall be
determined
by
applylng
the standard.
In the
absenceof a standard
hat
applies o
a transaction,
management
shall use its
judgment2l
in
developing
and
applyingaccounting
olicy
hat is
relevant
and
relrable.'
. CONSISTENCY F ACCOUNTING OLICIES.Once selected., ccountingpoliciesmust be applied consistently
for similar transactions,
unless a
standard specifically requires
otherwise. An entity
shall change an
accounting
policy
if
the change
(1)
is required by
a standard,
or
(2)
results in
the
FS
providing
more
relevant
and
reliable inancial nformation.
.
CHANGESN ACCOUNTING
OLICIES.
change n
a'ccounting
olicy
hat is rdquired
by a standardshall
be
applied
'in
accordance
with the transitional
provisions
therein.
If
a standard corttains no
transitional
provisions
or
if
an accounting
policy
s
changed'voluntarily,
he change
shall be applied rettospxtively
(as
if
the
policy
had
always
been
applied) as adjustment to
the opening
balance
of each affected
component of
equity
(e.9.,
retained
earnings) or the earliest
prior
period presented.
For
purposes
of PAS
8, the
following
are
NOT considered
as cfianges
in
accoqtrting
poticies:
tufav
t
l. Application
of accounting
policies
or
differ in
occurnng.
Ev.?ti
|
2. Applicationof a new accounting
policy
or were
immat€rial.
eryrhr,
EXCEPTION
o the RULE.
When
it
is
for
an
retrospectively
(i.e.,
it cannot
determine the
cumu
effect
of applying
the
policy
to all
prior periods),
the entity aBplies he new policy prospectivelyfrom th€ start of the earliest perlod practicablc.
APPLICATION
f NEW STANDARDS.When
an
entity has
not applied
a new
standard that has been
issued
but is
not
yet
effective,
he entity shalt disclose his
fact,
and the
reasonably
estimable nformatbn relevant
to assessing he
possible
mpact
that application of the new
standard will have on tlte entity's FS in
the
period
of initial
application.
CHANGES
n
ESTIMATESz3.
he
effect of a change
in
an accounting
estimate shall be
recognized
prospectively'by
ncluding
t
in
the
profit
or
loss during
the
p€riod
of the
change
(if
the change affects
that
period
ohly) or
the
period
of
the
change and
future
periods (if
the
change affects both).
EXAMPLES
f
CHANGES
n
ESTIMATES.Due
to uncertainties
nherent
n
business
ctivities,many items in
FS
cannot
be measured *ith
precision
but
can only be estimated.
Estimation nvolves
udgments
based on
the latest
available,
reliable nformation.
Common examples
of
accounting
estimates nclude:
1. Bad
debts and
iOv€re0ry
ohsole$eoac4-
2.
Falr
value
of
flnancial
assetsor financial iabilities
3.
Useful
ives
of
depreciableassets;
and
4. Provision or warranty obligations
A
change
n
tht measurernent'basis
pplied
is
a change n
an accounting
policy;
and
is
not a
chang€
fi
rn
accountlng
dimate. When
it
is
a change n
an accotmting
policy
from
a
change
n an
accounting
estfmate,
in
accoufltino
estimate.
.
CORRECTIOIIOf ER
errors-,retrospective/y
as an
adjustment'to
the opining babrrces of retairied
earnings
and affecttsd
aeets
anO ti$bitities.
If
comparative
statements'are
presented,
the
FS
of
prior period
shall
be
restatd
to reftect ttre
retrospeefive
applicdion of
the'prlor
paiod
errors. If the error
oca.rred befor€ the
earliest
p€riod
p'r€sented,
heopening'balances
of
assets, liabifities and equity for
the earfiest
period
presented
shall
be restated.
.
MATERIAUTY25.
n
apptyirB
th€ coricept of materidity
Frya:, .
Accounting
poticies
n
tle
pFRSg
need not
be applied when
the ehect of
apptying them
is immaterial.
2. FS
do' not
comply
wlth
PFRSs if
they
contaln material
'errors,
whether due
to ornisslons
of
ed
for
issue
. Material
prtrcr
period
errors should
be
corrected
rctrospectively
in
the firgt
s€t
of
FS
authoriz
after their discovery.
Accounling
policies
arq
the.specific
principles,
bases,
convention,
rules
and
practice
adopted
by an entity in
preparing
and
presentin
fi
narcial
staf,ements.
ln
makingiudgments,
managemant
hall
refer to
the following
sources ndescending
order:
l)
The
requirements
and
guidance
n standards
dealing with
similar
and
reiated ssues
2) The
definition,
reognition criteria
and measurement
oilcepts
set forth
in the
Corceptual Framewnrk.
In
making the
udgment,
management
may also consider
the mostlocent prorouncements
of other standard-setting
bodies
that
use similar conceptual
framework
to
deve.lopaccounting
standiirds,
other
accounting
literature
and
accepted
ndustry
pra0tices,
o
the extent
hat hese'do
not
conflict with PFRS
und tt"
Conceptual
Framewoik.
Applying
a r€quirement is
impracticable when
he entity cannot
apply
it after
tnaking
every reasonable
effort to do
so.
A
chaJrgen
accountingestimates esults
lom
new infbrmation
or
developments
nd, hence,
are
not
correcdionS'ofrrors.
The conceptof 'fundamentalerror' hasbeen eliminated. lnstead.PAS 8 usesand defines erm 'prior period
error.'
prior
period
errors are
omissionsand misstatements
n the F'S
or
one or
more
periods:
hey
are
committed
n
prior
periods
but
are discovered
nly in
the current
period.
Omissions
or
misstateilients
f
items
are mater ial, if
they could,
individually
or collectively,
influence
the eccrnomic
decision3
f users aken on the
basisof the FS.
Materiality
epends
on the
srzeand
natureof
the
omissionor
misstatement
judged
in
the surrounding
ircumstances.
'
7Q\
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'IHEORY
of ACCOUNI"S
EC'IIJRE
OTHS
,"
0..*-
" .j
PFRS
: NoI*.CURRENT
sSErs
leln
FoR ALE
DtSconnlNUED
peRlnOxs
.
NON-CURRENT
SSETS
ELDFOR
SALE.
An
entity
shatt
classify
separately
from other assets
a
non-current
asse:t:
or
disposal
9roup26)
as
hetd
for
sale
if
its carrying
amount
wilt be
recovered
principally
thiough
a salez7
ransaction
rather
than through
cont inuing
se.
The foflowinE
conditions
must be
met for a
non-curt'entasset to be classified
as held
for sale:
1. Management
s committed
o a
plan
o setl he
asset
or disposal
roup.
2.
An
active
program
o
locatea buyer
and complete
he
plan
must have
been
nitiated.
3. The ass€tmust be available or immediatesale'
:e.
The sale
is highly
probable
within
one
year
from the date of claisification
as
held for sale.
5.
The
asset
is f,Cing'actively
marketed
for
gale
at
a
price
that
is reasonable n relation
o
its
fair value.
5.
Actions
required
to complete
the
plan
indicate that
it is
unlikely that
the
plan
will be
significantly
changed
or
withdrawn,
p
An
entity
shatl
measure
a non-current
asset
classified
qq,hg( ".1pgg$
atthe
lawer of
its,carytlg
a or
fair
value /ess
qosti
to
se//28.
Non-currentffitl
ruo@ate
classifred s sucn,
An'entity
shall
present
a
non-currentasset
classifled as
held
for sale separately
from
f
Those
assets
6nd
liabllit ies
ffi
aEEetr-anA
iauititfes ldsslfied
s
held
orsa
sh€etor in the notes.
classifJed
s held for sale
and
the assets
of
a disposal
group
other
assets
in
the balance sheet.
The linllli3i,gg
of
a
disBosal
ted
from
other
liabilities
in
the
balance
sheet.
as
a single
amourtt,
The major
classes of
separately
6'h'tne
face
of
the
balance
o
An entity
shall
measure
non-current
sset
hat
-c?-ases
o be classified s
g .djgt-€g. g
t
the
lqHer
pf-
ts
?e'fd-6fEuFsequent
ecision
ot
to
sell).
.
DISCONTINUEDOPERATIONS.
A
discbntinued
operation
is
a
component
of.
an
enttty3t hat
either
has
been
disposed
of,
or
is
classified
as
held or sale,
and
1.
Represants
a separate
major
line
of businessor
geographical
area
of operations
'
2.
Is
paft
of
,a
singt'6
coordinated
plan
tp
dispose
a separate
major
tine
of business
or
geographical
area of
operations,
r
3^
Is a subsidiary
cquired
exclusively-with
vlqw
to
resell
fbr
resale)
A component
of an entity
is
classified
as
discontinued
operation
at
the date the
entity
has actually dtspocad
of
the operatiqn
or
when
the operatidn
m€ets
the
Cftetls to
be classifled as
held
for sale.
n"
""tit-V
init iOisctosea StruCLE mount32 n fhe faceof incomestatement omprisinghe total'of:
1.
The
post-tax
profit
or
loss of discontinued
operations
and
.
2.
The
post-tax
gain
or
loss
recognized:
A) On
the
measurement o'fair
value esscosts
o sell33'OR
Bi On
the disposal
of
the assetsconstituting
he
discontinued pera
26
A
group
of
assets
pobsibly
o
be
disposed {
by sales
qr
otherwise, ogethetas a
glofip
in
a
single
ansaction,
and
liabilities
direttty associated
ith those
asssts
hat
will be ransferred
n
the ransaction.
2t
j1ft.
^*i"r
Jirp"*f
gr"rpl ru*
uu available
or immediatq
ale n its
present
"ondition
and
he salemust
be highll'
prohahle.'Highly
probrble'msansthatthe
robabrlity
f
ttle
future'sales
high6rtftan'mor€
ikely
thannot,'A,n
entity
.
shall
not
classiS
as
held
or sale
a
non-curentasset
of
diryosal
$roup)
hat
S o
be
bbbndoned
?a If a non-currfilta$s€twithin thescopeof PFRS5 is par.t f a disporial.roup, he measurementequirements f PFRS5
.apply
to the
gronp
as
a
whole,
so
hat he
group
s measuedd
lowcr
of
its
carr,ving
mount
and
air value
ess osts o
sell.
The writp-down
o
fair'value
ess
cost o sell
s
tredted
san'imqafument
ass.
?-e
The
canying
amount
s adjusted ur
depreciation,
rnottizfition r
revaluationshat would
have
been
nocogrtizedad
he
asset ot been
lassified
sheld
or
sale.
30
Recoverable
mount s
tneasured
s he
higherof an asset's
air value
ess
ost
o
sell and
ts
value
n use,'l'his
s well
emphasizedn
PAS36
on mpairment
f
assets..
3l
A component
f
an
entity
may be a
subsidiary,
major line
of
bwiness
or
geographical
egment
whoseoperations nd
cash lows can
be clearly
diltinguished, perationally
nd oi financial
eporting
purposes,
rom the
restof
the
entity.
32N
t'h"
lgsults
of
discogli0ued
peJatiou,
tet
giJgx,
g ou - gshown
4s,a
sirlgle. mou4
in the income
tatem€nt
epaately
grom
the
income
rom
continuing
ireiations.
I'o explain he details
of
this single
emount,
he
following shouldbe
disclosed
n henotes
o the
FS:
L J'heamountof revenue, xpensesnd ncomeor lossattributableo the discontinuedperati<lnuring he curr€nt
period
nd
he
elated
ncomeax.
2. Any
impairment
oss
as
he 'air
value ess ost o
scll of the net
assets
f
the discontinued
peraticrns
s lowerthan
theircarryirigamounts)..Ulhg
grJyi .g
mount
llow
,
tle_expected
ai
is not
recqgnizqd
-qt
nly
disclosed.
I
3. the termination
ost
of enrployees
nd
other osts
lrat
are
directly
ncurred
sa
esultot'thediscontinuance.
4,
Any
gain
or
lnss
i'om
heactual
isposal
f theassets nd
settlcmentf liabilities f
a discontinued
peration,
33
'e
ts.Jo-ieJt's
he ncrcmental
osts
irectlyattributable
o
thedisposal f anasset
or
disposal
roup\.
xciutling,
rnzncg
costs ntl
ncomeax
expense.
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ol
Page
I t l t ORY01A(
(
() l
;NTS
F( t Rt :N(I I I IS
PAS 24: RELATED ARTYDTSCLOSURES-
,i
h.tfh
N 'p4
*a*4
d,a
u9.. ,.tle
Ftraah
ar.4ra
4ot
,
.
puRposE.
erated
arty
erarions'r1*y.fr&1"#;""&
t#,x"t" " ;:"#;# ;;,1#[
#,
*",
enter nio
transactionshat
unrelated
art ies
wouldnot. Also,
ransacl ions etween elated
art ies
may nol
be made at the same amounts s between nrelated
art ies. (e.9,,
aa enti ty hat
sel ls
goods
o
its
parent
companyat cost might not sel l on lhose terms lo another
customer).
For
these reasons,
lgltedq-e
of
relaied
party
transactions,
qutstandinq
balances and
gE g : pg
may
affect assessmentsof an
-trty's
perat
ons
by
users
of f inancial
tatements/
ncluding
ssessments
f the
nsks
and opportunrt iesacing
he
enti ty; hence, elated artydisclonrres re necessary
.
RELATEDARTY.
party
s
related o an enti ty f :
A)
Drrect ly,
or
Indrre. r ly
r f . rouqh
ore or
rrore
In lFrmedtales,
the
.
h;s the dbi l ly to
(ont ro l
' ,
is
t ta l lq l :Uy,
o rs Lnde.
wrth, h€
enti ty
( this
ontrolted y,
or is under
party:
,t.
t*
Inc
uoes
parerts,
suDsroralesno elow suDSr0rar.es)
.
has an interest n the enti ty hal
gives
t s iqnifrcant
nfluencers
ver he enti ty
;
hasa
rornt on trolr6 ver he €nt v
Ine party s
an assoc,are I tne enlr ty
fhe
party
is a
9D 9 W+rn
which the
enhty rs a venturer
The
party
rs
a
member
of thel<ey management
personnell
of the enhty or
its parent
The
pafty
6
a
9P'e-E y_ E jPe
r or any individua referred
to in A
or D
The
party
is
an enti t y that is control led,
orntly
controted
or signi l icandy nfluenced
by any
Individual eferred o in D
or
E
The
pa(y
1sa
post-employment
benefit
pla4
for
the benefit
of empioyees
of thc
enttty,
or of
an
enti ty hat s a related artyof the enl i ty.
fif;.I{.f,$ffjff}|y
arrerFD PAPrlES
Unoer
As
/d,
tr-c
ollow'rs
,e
A)
wo
e4Ll e srmply becdLse they hdve
d
(omn
on
d
rcLlor
NOTnecessanlyetated
art ies:
or
other comro
llembe.
of
ley
8)
c)
D)
F)
8)
c)
D)
signif lcant olume
of busrness, erety
by vir tueof
the
resutttng
conomtc eoendence
RELATED
ARTYTRANSACTION. rel. ted party
transacrron
s
a transfer of resour.€s,
9PriTj'i.l "1*991
"i"Jgd
9' '9s'l993rdl@r€ he
a- se-.[ {scg-or, 9 .
lwo
venlurer: srmply
6ecaLse hey shdrF
o'nt
cont .o l over
a
tor i t
venture
Providers
f f inance, rade
untons,
Lrbl ic
tt l i t ies,
overnment
epartment
nd aqencres, tmply
vrr tue
of their norma deal ings
rthan entr ty.
A
customer, supplier,
Eq q[€qr,
g]q Ulor,
or
generat
agent with whom
an en(ry
by
CIOSE
FAI4ILY
MMAERS
OF AN INDIVIDUAL.
tose amrtv
memtiers
of an__indivrdual
memberswho
may be expected o inf luence,
r be inf luFnced
y
lhat
individuat.
n
therr
enti ty-
They
nay nclud€:
A) Ihe Individual 'somestrc artner ndch ldren
B) Ch.ldren r rhe Inorvroua,' i
omiir , i lanne,
C)
Oependents
fthe ndividual
r the indrvrdual 's
omestic
artner
PARENT
SUBslDIARIEs
Relatronships etween
parents
dnd subsidiaries
shalt
be disctosed iES6EZtive-
f
whether
there have been
transactions between
rhose
.etaled
partres.
en eiiilfl-n-iil-iEcto-idE6-iE-mi
or
the enti tys
parent
and, f
dif ferent,
he utnmate
ontroltrng
arty.
coMPENSATIoN*.an
enti ty shal ldiscrose
ev management
ersonnet
ompensatronn totar
and for
each
of Lhe ol lowrng
ategor ies:
A)
Short- tefm
mployee enefi ts
e.9,,
wages, ocrat
ecL.lr i ty
ontnbutions,
ard
eaves,
onuses)
B) Post
employment enefi ts
e
9.,
pensrons,
etirement
enefi ts)
C) Other ong-term
enefi ts
e_9.
ong
servrceeave, ong
erm disabi| l y
enefr ts)
D) Terrninatron
eneftts
f) Fqurty
o.npen\drronerprr(s
KLLArtD
pARry
D15CLO5URE5.
r there have
been
ransactions
etween elated
partres,
n enti tv
shal l
disclose the nature of the retateclpatt rclatianship as well as information about the trafsactrons and
outstanding
alances ecessaryor
the understanding
f the
potential
t fectof
the
relat ionshap
n the FS,
At
the mrnrrrum,
isc,osureshal l nclude:
*
A) The
amount
of the ransactions
I
e) rhe
;m;un-i of@lnqqes
and
.
Their erms;and
ondit ions/
nd whether
hey are
secured
r unsecured
,
Thenature/of
ett lement onsjderatjon,
nd
detaits
f
quarantees
rven
or
recerveo
A) Provlsions
or bad d€bts etated
o the amount
of outstanding
atanc€s
B)
EIp€ SC
recognized n respect
of bad debts
due from retated
partres
'Contft]l
;s the powcr
o
govem
thc financial
nd oterati|lg policies
ol ar
cnrir n) rs ro
oblain benclils fiorn i1s
rctiviries.
( t ,As
7)
'S igni t lcanl
nt fuerre. s
the
fower
$
parr ic ipr te
n
the
inir lci i l
and opcfar ing
ol ic_ ' -
ecis ions t an
enl i ry.bur s nor
control ovcr lhosc policiei. Signiflca t inlllonce
nay he
gaincd
hv
shareo$ncrship.
sratulc, r agrccmcnr.
pAS
t8)
Joi r l (onl ro l
is a conlmcrual l
gr*d
shi r in{
o l conrro lo e. i ln
economic
ct iv i l r -_ ,AS t )
'Ke,v-
managemcnr
pcrsonnel
rettr
ro
lhose
pcrsons
hnving
aurhofit) ar)d
rcsponsibititl
ibr
ptannins.
dircct;ng.
and
conlrol l ing
heact iv i t ics fan cnl i t \ .
d i rect l or indi rcclly.
nd
nchde
di rccto.s
execut iv.
r
orherwise)t lhc cnt i rv.
'Compensarionncludcs l i empk' )ee
benel i ls .
vhich
nclLrde
al l lbmrs
ol considcrar ionaid.
nJ)nhte
^r
lr
, r idcr t
b\ r t re
erui t \ , .
r
on
behal fdf thecnl i t \ . in c\chang. i t r services
enJcrfd o
theLf l i t \ rp
S tq)
d€alrngs
wrth the
7/21/2019 Conceptual Framework of Acctg
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ReSA
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Sadoll
a{
&turra'rsl
THEORYof ACCO[INTS ECTURE
NOTES
EX'AMPLESF
RELATED
ARTY RANSACTIONS EQUIRING
DISCLOSURES.
,
The ollowingare examples
of
transactions
hat are
disclosed
f
they
are made
with
a
related
party:
A
B
C
D
-'E
G
H
d) Determination
after
the
8S
date of
the
cost
of asset$
purchased,
or the
proceeds
from
a6sets sold,
before
tt|e
Bs date.
e)
Determination
after the BS date
of the
profit
sharing
or bonus
payrneni
if
the enterprise had
the
present
obligation at the BS date
to
make
such
payment.
f)
The
discoveryof
fraud
or etrors that show
th€ FS
are
incorrect.
An
entity shall adjust
amounts
recognized
n
its FS
to
reflect
adjusting
events after
the
receives infopmation
after
the
BS date
about conditlwrs
that
existed
at the BS
indicative
of condltions
that
notes
to the
FS.
Examples
b) Bankruptcy
of a customer that
occursafter BS date,
confirming
a trade receivable.
c)
gale
of
inventories
fter the BS datg that may
give
evidence
n
date.
that
a
loss
exi*ed at
the BS date on
net realizable
value
(ll&V)
at
the
BS
BS date.
If an
entity
date,
it
shall
upd*
disclosures,$h*t
reldte to those
condltlmt tl|i
m'fi fit'd
tha +lc*.*trOsnAtion.
t . NON-ADJUSI'II{GEVENTSaIafter the balitnce'sneet date (i.e., thsse that are
aro,se
after
the balance sheet date)
are not recognized
but are
disclosed in
the
.
are
(among
others):
a)
J:lgior
btrsiness
cshbinatlon or
disposiqg
of a malor
subsirtiary
after
the BS
date
b) Announcement
of
e
pfan
to discontihue
an
operation
+'
c)
.Uglor
purchase
ard disposaf
of assets,
or
expropriation
of major
assets by
governrnent
d) Destruction
of
maJor
production
ptant
by
a.fire after
the BS
date.
e) Announcement
of al3ejor restructuringo2
f)
Stjgr
ordinary share trbnsactions
and
potential
ordinary
share
transactions
after tsS
datb.
9)
$bnormafi
large
changes after the
BS date in
asspt
prices
or foreign
exchange rates,
h)
Changes ntax ratcs
or
tax
lrys
enacted or announced
after
the 85
date.
i)
Entering nto;$'nificBltcornihitments
or contingent
tiabilities,
or
example,
by
issuing
guafantees.
j)
€ommencingrnalor
litigation
arising
solely from
events
the
occurred
after
the
BS date.
*k) Decline in market vafue of investments between the 8S date and the date when the FS are
authorized
or issue.
r
DIVIDENDS.
Divideflds.
on
eguity
shares
declared
after the
balance
sheet
date
should.not
be
recognized
as a
liability
at
the
balance
sheet
date.
Such
dividends
are
disclosed
n
the notes
to the FS
(i.e.,
a non-adjusting
subsequent
vent).
'
GOINGCONCERN.
CitCiio-ratidn
n
operating. esutts
and financial
position
after the
balance
sheet
date may
indicate
a
need
to
consider whether
tlre
going
conceifr'"iS
tilt
aiipiopriate;
an entity
shoutd not
prepare
its
financial
statements
on a
going
concern
basis f
mahagernent
determines
after
the bafance
sheet
date
either
that
it intend5
o
liquiclate
he entity
iir
cease
r5efingi
ctr
hat it
has
nb realistic
alternative
but
to
do so.
f rs
40
4t
This
s
previously
alled
as subseQuent
vents'.
Subsequenl
vents,
sdefined reviously,
re
eventshathappened
fter
the
BS
dateuntrl the,dq ,g /' S
it
.
r r thavetheDorry€rtoamendtheFSafter issue, theent i tysha| |disc iose, th is fa it .The
process
nvolved
in
authorizing
he FS for
issue will
vary
depending
upon
the
management
trucfure,
statutory
requirements
nd
procedures
ollowed
n
preparing
nd
inalizing
he
F'S.
An
entity shalldisclose
he ol{owing or
each
materiaffiitegory
f.qgn-adjusting
vent
atter he
BS date:
.
The-lature
f theevent
',
',
.
An
estimate
f its financial
ffect. r
a statement
hat
such n
estimdte
annot
e made.
a
A
,estructuring
is a
program,
planned
and
controlled
by management.
hat
materiallv
changes
either the
scope
of
a
h ci -o " nnAa* L a k an- ' t- ^ i - - i r l ' ' 1 ' ^ r1 ^rL ^i - -- ----r- - -r rr^<
Page
furchasesor
salesof
goods finished
or unfjnished)
Purchases r
sales
of
property
and
other assets
Rendering r
receiving
of services
Leases
Transfersof
reiearch
and development
Transfersof licenseagreements
Transfers
nder
inancearrangements
including
oans
and equity
contributions
n
cashor in kind)
Provisicin
f
guarantees
or collateral
I)
Settlement of
liabilities
on behalf of
the
entity or by
the
entity on behalf of another
party
Items
of similar
nature may be disclosed n aggregate
except
when
separate
disclosure
g neceEgaryor
an
understandingof the effects
of related
party
transactions
on
the
FS
of the entity.
PAS
0:
Evenrsrren
HE
ALANcE
HEETrrr
(Evexrs
rrenxe
Reponrrue
enno)
.
EVENTS
FfER THE
BALANCE HEETDATE3S
re
favorable
and
unfavorable
events
that
occur
betwem
the
balance
sheet
date
and
the
date
when
the FS
are
authorized
for
issue; FS
shall dlsclose
the date when the
FS were authorized or issue,
and
who
gave
that
authorizationao.
.
ADIIiSTING
EVENTSafter the balance sheet date
(i.e.,
those that
provide
evidence of conditions
that
existed
at
the
balance
sheet
date)
should be
rqcognized
tl
the FS.
Examples
are
(among
others):
a) Resolution or settlernent after BS date of a court case that confirrm that the entity lad a present
obligation
at
the
BS
date,
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Peraen,
€net
a(Awc'ta'ry
Page
THEORY
ofACCOUNTS
LECTURE
NOTES
PAS37:Pnoustgxs,Coxttt.|oemLngunes&Gorw[regxIAssETs
1.
PROVISTONSre
liabilities
of
ylcgGrirtllqjlrg
or amount.
A
provision
should
be recognized
when:
seftle the
obligation,
and
Provisircnsshoutd not, be recognized for future operating loisesr If an enterprise has a contract that is
*
onetaus43,he
present
obligation
under the
contract should be recognizedas
a
provision.
2. An OBLIGATION
EVENT
s
an event
that creates
a
legal
or,
constructive
obligation
that
results
in an
entity having
no realistic alternative
but to settle the obligation created
by
the event.
3. A
TEGAL
OBLIGATION
s an obligation that
is
derived
from
a contract" legislation, or other
operation
of
law.
4.
AgOIfSTRUCTIVE
OBLIGATION
s an obligat-ionhat derives
rom
an entdrprise'sactions where:
A)
The enterprise
has
indicated
o other:parties hat
it
will accept
certain rcsponsibilities,
and
.
.
B)
The
enterprise
has created,a
valid
expectation on the
part
of other
parties
that
it
will discharge
'certain
responsibif ties
5.
A
CONTINGENT
IABIUW'is either:
>
A
Bossib/e
oQ-ligatiorthat arises
from
past
events and whose
existence will be confirmed only
by
the occurrertce
or non-occurrenceof one or more
uncertain
lrturc
events not wholly within
the
control
of the
entity,
gB
,
@F5tr'ffit6oatflow
of resourtes
erhbodying economfc
ber€tfrs
will
be
required
to
'
obligation
or the
amount
of the obfigationcannotbe measurd
with
sufficient
eliatt'tity.
Hence, an enterprise shoulfot
recognize
a
continEent.llg_bility
n
the face
of
FS, A contiogent
liability
rs required o bg dr'ffiTtffi6e-FffidE;ffi
benefits
is remoE.
6.
A
CONTINGENT
ASSET is
a
posslble
asset
that arises
from
pdst
events and
whose
existcnce will
be
confirmed only by the occurrence or
non-occurence
of one or more urrcertain future events not wholly
within the
control
of the entity.
Hence, an ehterprise should
not recognize a contingent
asset.
A
contingent asset is required to
be
disclosi4
in
tlre
notes to
the
FS, where
an
infiow
of economic
benefits
is
prcbable.
Horriever, when the
realization
of
irrcome s
yirtlraily certai , then
the related
asset is not
a
contingent
asset and
ir
:
(esstrffiifid"tfie
atnonnt6'
#ft
rneasrifd
ren*ffV)'
of
PBCII/ISIOI{,The
amount
recognized
as
a
prwision
F----------------
h
ttre
oEST
ESTIMATE f
be reimbunsed
y
anoth€r
Farty,
. *,
is not
settle
the expendilure
reguired
to srittle
th€
present
obfignlion
at the
balarrcc sheet date,
takfng:into accourtt
the
nsks and uncertalntres surrounding
the circumstances
that relate
to the
provlsion.
.
Where
the
provision
hing
measured
involves
a
large
population
of items, the
obligation
is
estimated by weighing
all
posSible
outcomes by their
associated
probabltlti€s.
This
statistical
mettrod of estimation
s known
as the EXPECTEDALUE.
'
-$lh-€re
herc,is
a
continuous
ralge ol-poSsitile outcom€s, and
each
point
wfthin the range
is
as
likely
as
any
oth€r,
the
MID-POINTof the
range
is used.
.-
.
Where the
effegt of thFtlme
vatuc
of
money is
materlal,
the amount of a
provision
should be
theJnESENT VALUEof the expenditures upected to be required to settle the obligation.n
*rt
8,
REII"IBURS€MENT.Where sirme
or
all
of
the expendftures required In
s€,ttfing a
pro-vBion
s
expecfed
to
e
reimbunsed
y
another
party,JElSlgqu.rsemS
should
be
recognized"as
'ieparate
a'sset
when t is
iftuaily
Certain hat
reimbursementwill
be
teceived f
the
entity s€ttles an obligation. The
amount
tmnily ce.ryatnmat
relmDursem€nt wilt
D€
receMeo fr
tRe
ennty s€ttles an oDlrgatlon.
.lne
amount
recoqnized for the reimbursement should
not
exceed the amount of
the
Drovision.
In
the
income
statement,
the iloense rclatinq to a
orovrgon
marr
be
oresintfficoonrzeo fror atat€ment,
he eiFnsr relating o
a
provision
may
be
presented
net-ofTl}e
affiuEFrecognized
or
a
9.
reimbursem'gn1.
t&.
*ati../rryeo
ryn;ua*.
RESTRUCTURINGfS.
provibion
or restrircturingcosts is recognlz€d
only
when
the
general
criteria
for
a
prcvision
are met
(see
item no. 1). A restnrcturing
rovision
should not
be associated
with
oilgoing a'ctivitiesof the
enterprise and should
not
include
costs
such as
retraining'
or
lblOcating
continuing
taff,
marketing
r
investmentn new
systems'and
istribution etworks.
45
An onerous ontraets a contractn which he unavoidableostsof meetinghe obligations nder hecontractexcecdhe
economic enefi;s o be
received
nder
t. The erm
onerous'
iterally.meanylyrdensone.
The
discount
ate shoulda
pre-tax
ate
hat
reflectscurrentmarket
assessments
f the time valueof
tnoney
and
the
rl*s
specific o ttre iability. The
discount ateshouldnot reflect isks or which
futurecash low est imates avebeen
adjusted.
(PAS
37,
pu
47)
A
restructuriflg s
a
prgeralp,
planned
and controlledby management,
hat materially
changes
ithcr the scope
of a
business
ndertaken y an enterprise
r the
manner
n which
hatbusinesss
conducted.
CONTI'TGEIIIT IABI LITY
a er<
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THEORY
of ACCOLTNTSECTURE
NOTES
,
1
,.
t.
'*
" ' ' ;
5t f t
'
Excenprs
N
PHlurpptt{EccouilTANcy
cr or 2fi}4's
hrrplememtG
ttrEsAilDREGUlATpils
lRR)
HISTORICAL ACKGROUND.
Repubfc Act
No. 9298 or otherwise
known
qs
The Phitippine
Accountancy
ftlt
of
2OO4
repeals Presidential
Decree
No.
692
or otherwise
known as The ReuisedAccountancy Law. The new Act was
passed
during
the
3'd regular session'of he
12tl'PhilippineCongress
rorn
the consolidationof Senate
Sill No.
2748
(passed
6
February 2004) and
House
Bill
No.
6678
(passed
7 February
2004). Former
President
Gloria Arroyo signed
and approved
t on
13 May 2004, he
day
the
consolidated il l becamea law..
MTIONALE.
The Philippine
Accountancy
Act
provides
for
the set of
rules
governing
the
practlce
of aceountancy n
the
Philippines.
The
Professional
Regulatory Board
of Accountancy
(BoA),
one of the
profeisional
bbtrds,under
the
Ftofessional
Regulation Commission
(PRC),
s mandated
by the Act to
promulgete
rules
peitaining
to
"the
supervislon;
controt ahd
reEulatioil
of the.practice
of accountancy n the Philippines." In &ovember
2004, BoA issued and apgroved
a
set of rules and regulations
implementing RA 9298, norv known
as
Implem€ntingRulesand
Regulations
IRR).
FINANCIALREPORTING TANDARDS OUNCIL.
UTE
Within
90
dqys
from
the effectivity
of
the
IRR for
the
Phitipptne
Accoufitancy Act of
2004,
the Ffnanclal
Reporting
Standards
Council
(FRSC)
shall
be
created,
The
FRSC eplaces
he
ASC
and evaluates
he IAS
ang{FRS that shall be
adopted in the Philippines.
Other than the
chaiiman6, the
FRSC
ahall
be
composed
ofQ4gg*bers
representing he
foltowlng
organlzatlons
Z
,l*t
u1
ProfessionalRegulatory
Board
of Accountancy
(BoA)
1
member--
,
securities
and
Exchange
Commissircn
SEC)
|
membey-
,"
':':
Bangko Sentral ng
Pilipinas
BSP)
1 nrembeg,.-*,
--l--
Bureau of
lriternal Revenue
(BlF.)ftr*
ia&*Hta
nael4f;c)
1
member
A major organizationcomposedof fS preparersandusers 1 mernber
Commission on
Audit
(CoA)
(ao(
tiaud
e
Ne)
*
Accredited
Frofessional
Orcanfzation
(,tPO)
l member
8 members*4
4
a,2&*b
*
The 8
tr$re$entat$ves from
Accredited
Professional
Organization
(APO)
halt
b€
egually
dlvided among the
accounting s€Etots:
puBllc practice
(2
mernbers),
commer,ce
and
industry
(2
mc+nbers),
educdion
(2
members),
Eov€rftrn€nt'(2
mernbers),
At
pr€s?nt,
BoA,taognizes'PICPA'Is
ttrc
xcredited
profiessional
organization
ApO)
of
CPAs n the
Phffippifies.
ACCOUf{IrNG
STANDARDS
OUNCTL
ASC).
ASO
The ASC
wEs th€
'authol' of rrrh*
uscd to be knorn
as SfAS
(Statranents
of
Finrrrclal Accq4tirtg
Standards).
Fotmed
to establish the
generarlly
acccpted
accounting
principles
in
the
Philippines,
tl|€ ifgic
fr*
perfonned
its function since
Novernber
1981 tir{fi
t'r.s
rcdaced
by the finarldal Reportirlg
Strr$
Council,
punruartt
o the IRR of tfte ntfv atcountantry |fr. ASC
was composgd
dgight
rrfcfilterls,
nofitfna:|
by the
ottowing
rganizations:
1nnDq1$
r*titute of certilied
Public
Accountants
4 members* fw
,
Fg$ie_s
a1n.|-
Fxcfianse
ommi$ebn r mewr${
iffi-
Ban'gko entral
ng Pilipinas
1 membcp/
Sosrd
of Aceountancy
1 memhe/
Finrid$i€reqrtivei,InbtituteofthcPhilippfner
tmer+*,i r
In
i997, tne As
trirde
a
decslon
to
harmonlze
accoufing'stendanls
lft
tfre
pftifippines
wfth
Intat'fiaflonal
Accounting
Stardirds
(149),
brhkfi later
evohred
nto
International
Financd
nbporting
Standards
IFRS)a;'.
Conseguefttly,'tFfisbrroft€stlE 6as}sof
the'fttfipptne
Financial
RepoftifiE
$rnOards
ipfns)48.
''
'
.
PHIUPPINENTERPRFTATIONSOTIII'IITTEE
PIC).
JT
The FRSC
orrnd
nc
miUppiil rntergebtions.Cornrnittee
(PIC)
in
August
,?096
to assist the FSSC
**
47
:.
48
standards'in
ttrn-anqral
epgrting
stardards in
the Philippines.The role
of
the
PIC
rs
The PIC
members'are
appoint* by
the
FRSC
and
pfactice,
the academe and regulatory
bodies and
users of
frnancial
statements.
t . f f i
,. Hc
The
FRSC
Chairfian,
*ki hab
beenor
presently
senioraccounting
ractitionei
n
any scope f accounting
ractice,
hall
b" bppsintud
bfi
tbaPRC
epon
he recennmendationf BoA
in
coordfuidisr
with PtCPAras he
mcrtditli
professional
organizations.The
Chairinan
and
members
f FRSCshall
have aierrn
of
three
(tr)
ye.ors
arrewableof'another
erm.
IFRSs
are sEndards
ssucd
by the
Iniernationgl
ccountingStanduds
Bmrd
(lAS);
the IASS
replaced
he International
Accounting
Sfanderds
ommittee
IAS€)
in
200 .
Based n
paragtaph
of PAS l.
the
erm
PFRS'
shallbe
composcd f
(a)
PFRS
b)
Philippine ccountipg tandards
c)
Interpretationq. PFRS s€ts out the recognition, me{Nwemefl4presentation
and disclosure requirements
dealing,with
ffansactions
nd bvents
hat are important n
general
purpose
FS. A
PFRS s
developed hrough a due
process'that
normally nvolves he following:
r
,
(a)
Considerationf the
pronouncerhent
f
IASB.
(b)
Formation f
a
task u-rce, hendeerned ecessary,
o
give
advice o FRSC.
(A)
tssuing;frr
csrohent'ad
exposure raft approved
y
ar teast
eight
(8)
FRSCmembers; omm€nt
eriod
will be at
<t
leastSgllays,-gnleqsshorterperiod not
ess
han{0
days) s
considered ppropriate
y FRSC.
--
(d)
Consideration
f
all comments
eceivedwithin
the cornment
period
and, when appropriate,
reparing
he
comment
€tter o the IASB
l
(e)
ABprovalof
a standardUy-gglgast $llQ ofthe
FRSC members
-
:
r'
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Page 11
THEORY
of
ACCOUNTS
ECTURE
OTES
.-,
n','"'-*'
PAS 4:
weRlu
epoRnnc
.
ENTITIES
OVERED
Y
NTERIM
REPORTING
TANDARDS.
1. Certain companies
required
by Securities
anl ExchangeCommission
SEC)
& the
Philippine
Stock
Exchange
(pSE)
to
puOiisn
nferim
73es.-
&ad
ftt
t+<ittt
ttt
N
ab
ebe
.
gaah.e
do ot rry.;rc.
2. Certain companies
hat
elect to
publish
an
interim
financial report.
.
INTERIM
FINANCIAL
REPORT.
An interim financial report means a financial rbport containing either a complete set of FS or" a set of
condensed
FS or
an
interim
periodso.
As a minimum
requirement,
an interim financial
report
should
include
the
following
components:
1.
Condensed
alance
heet/
2.
Condensed
ncome statement
t-
tt&'ng
bEf'r
2
0g6'tqat"/'tft/
erfe
3.
Condensed
taternent
showing either
changes
n
equity or compreherrive
incorte,
4.
Condensed
cash
flo.W tatement
/
\
5. Selected
explanatory
notgs
_
Baeic
and
diluted
earn-ings
er
share
should
be
presented
on the face of an income statemcnt,
coffiplet€
or
condensed,
or an
interim
Period.
.
SELECTED
XPIANATORY
OTESSI'
An enterprise
shoutd
indude the
following
information, as a
minimum; in the
notes
to
its interirh
FS, if
rnaterialand'if
not disclosed
elsewhere
nthe
interim fnarrcial rcport:
1. A statement that the same accounting
policies
and
methods of computation
arc
folloryved
n
the
interim
FS as compared
with the
most recent
annual FS or,
if
thos€
policles
or methods
have been changed,
a
description
ofthe
nature
and
effect
of
the
change.
-
2. Explanatory
comments about
the seasonality
or cyclicality
of
Interim
opQrations
3.
The
nature and amount
of
items afieCttfrg assets,'lia0illtie3,
'eq{rity,
net
incsme or
caCr
fiows that are
unusuaf
becAuse
of
th'eir
niture, size
or incidence'
4. The nature
and
amount of
changes
In estimates of ornounts
reported
in
prior
interim
perbds
of
the
-
current
financial
year
or changes
in the esfimates
of amounts
ieported
in
prior
?nancial
yeus
if
those
changes
have
a
material
effect
in the
curcnt
interitn
period.
5. Issuances,
epurchase
and
repayments
of dcbt
and equity
securities
6.
Diyidend
paid (aggregate
or
per
share)
separately
for ordinary shares
and otlrer shares
Z.
tsegment
Fevenue
and segment
result'for business
segments
or
geographical
segments,
whichever
is
the.primary
basls of
segrnent
repofting
g.
Material wgtlts
srfi6cqir€rrt,to-ttre"enAof't+ie
*i*ffl
pcrtwttrutt|tte
notOeen
tellcctctf
in
tffa
tg
ff
the irtterim periotl
g.
The efre-ct of
chang,es
n composition
of the
caErprig€
dwing the
interim
period,
including bueancg
cembinationS,
acquisltlon
or disposal
of
srtsidlsfies
and
long-terrn
investments,
restructurFr* rnd
d
scontinued
operati6ns
10.
ChangBg
n
contingeril
lh#ll{fiw
or
contingent
ssscts
sinec
the
lact annud
B'S
dst
.
.
PERIODS'ior
wn*ich
NTERI|Ti
FS
are'RE$JIRED
to be
PRESEfi|TED.
Interirn
rcports siioirra
inci"gelntJim
F3 ror
periods
es
fidlows:
'q'
1.
Balance
She€t
as of
ttre end
of the
currett
intedrn
period
and a
comparative
95
as.of
tie
end
of the
imrnildlttefy
p'feccdtng
financlat
laear.
z.
IncoilE statJ;;ts";ilil;;#*it;irtterirn
pcriod
and cumulatively
for the
cument
financial
year
to
date,
wlth compfftttue
incom€ Stetprnents
for
thrc
comparabb
interim
periods (current
and
year'to-
date)
of the
immedately
prcceding
finmcial
year'
3. Statement
strowirE
c#^g"s
irs
€quity
eumut*tivef
for
the
curre,r*
financi6l
year
,to
dat-e,
witl
compardive
stnter;ent
foi ttre comparable
year-to-date period
of
the
immediatety
preceding
financial
4. [33tn'
O"* st*ement
cumufatively
for the
current
fins*rcial
year
to date,
with a
comparative
statement
for the bortrpaiabte
4*rf-to-d*e
period
of
the
immediatcly
preceding
financial
year.
fi"
@
aPat
'
4s
The
Wasd.I$E
requireGfr-panies
overed
y
he
eportorial
cquirernerts
f.Revised ecurkies
ct to file
quarterly
inte.ifr-fi*ffid
,frft-glthii$
4Eyr
after
he
end
of
each
f
the,lntJhree,qgtres:.
Also,
heSEC
equires
ompanies
covered
y the
Rrrtison
fiiifreffiii-Papers
and
Financing
ct to file
quarterly
inandial
eports
within
45
days
aftereach
year-end.
so
'An
interim
period is
a financial
reporting
period
shorter
than
a full financial
year.
Interim
financial
reports may be
presented
onthly,
quarterly
r semiannually.
sl.
,An
example
f kinds
of disctosures
s
equired
y
PAS,34,
ar
l7 areas
ollows:.
.
, qa; write-ao-wnf inventories,toetrealizable alue.andhereversal f sucha wlite-down
iUj
r"cognition
of
a lcss
lom,the
mpairment
f PFE
and ntangibles
nd
he reversal
f such
an
mpairment
oss
(c)
reversal
f any
provision or thecosts
of restructuring
(d)
acquisitions
nd
disposals
f
items f
PPE
G)
commifinents
or the
purchase f PPE
(f)
litigation
eftlements
tgl
"oiurtions
of
fundamental
rrors
n
previously
eported
tnancial
data
(h)
any
debt
default
r'breach
fa debt
covenant
hat
has
not
be€n
orrectedubsequently
(i)
related
party
ratoactione.
.:
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ReSA
*74e
Rq&it
Stul
a{
t
THEORY
of ACCOUNTS
ECI'I RE
NOTES
,
,
*.
PFRS
:
OeennnNc
EGMENTs
.
RATIONALE.
An
entity
shall
disclose
nformation
to enables
users
of
FS o evaluate he
nature and
financial effects
of
the
business
activities
n
which
it
engages
and
the
economic
enuironments
n
which
it operates.
.
:t
ENTITIES
OVERED
Y
OPERATING
EGMENT
TANDARDS.
1'
Entities
whos;l
d'
tnrrtltr
2.
Entities
hat
are in'the
process
of
.lpsuing
equity
or de.b
s€curitie@
Inthecaseofgro.FTE;n_Faniesl i 'e ' , -p;Ff f ian-dsubsidiu. i" 'o4.
finahcial
tatements
of
the
group
only'
'
OPEMTING
SEGMENTS.
An
oper.ating
egment
s
a
cohponent
of
an entity:
A)
inat
engagis
in business
activities
from
which
it may earn
revenues
and
incur
expenses
(inclucting
revenues
and
,expenses
:elating
o
transactions
with other c0mponents,of
he
sarhe
entity).
B) Whose
operating
esultsare
idgubily
reviewed
by the
entity's.ghief
peratino
decision
maket'2 o
make
decisions
boutlesources
o be
allocated
o the segment
and assess
ts
performance,
nd
C)
For
which. iscrete
inancial
nfolmation
s available.
c
REPORTABLE
EGMENTS.
nh entitv
shall
report
separately
information
about
an operating
segment
that
meets
any
of the
following
quantitative
thresholds:
i
nl
Its
reported
revenue?
ncluding
both
sales
o external
customers
and
intersegn€nt
sales
or
transfers,
is
LOo/o
r
more of the'Combined
evenu€,
nternal and
external,
of
all operatirE
segments.
B) ifiAafiiolute amount of its reported Brsfrtor loss s 10o/o 1 more.of the great€r, in absoluteamount, of
(1)
combined
reported
proftt'of
all operating
segrnarits
hat did
not report
a
loss and
(2)
combined
c) ffi:*lJl.,'"T'Xl:HX'ilffiflS1ff':l3:Tgff:'"""i}",'tins
esme\y:
Y
":'
to
DnLeat
tf tne
total
external
evenue
eported
by'optirating
segments
s less han
75olo
f
the
entity's
revenue,
aOJttionat
perating
ejments
snould.beiidentifled
s
reportable
egments,
ven
f they
do
not
meet he
10o/o
hresholds,
ntilat
least7$o/o f entity's
eveRue
s includedn
repoftable egments.
.
AGGREGATION
F
OPERAT1NG
EGMENTS.
Two
or *or"
op r"I;;
il;;t5
iiay oe
aggregated
nto a singfeop€rating
segment
f
the
segments
have
similar
economic
haracteristics
nd'are
simitar'in
each
of the following
espects:
A) the
gglggg-of he
;
pioOuas
ana
services,
i) the
natureof
the
production
rogs.sges,
)
tlegpgg:ta?:
?rry
for their
ffis,
o)
ttte
methodrus.i:to
distribumFioducts
or
dffieTe-ir'-.servi.ces,
E)
and
if
appticable,
he,nblurF
f.rlqulglq"yjrylrylPlTj:
jgljtmple,
banking,
nsurance
r
puolrc
trrEres'
. DISCLOSUREO-PERATING EGMENTNFffiMATIOTI.
An
entity
shall
dlsclose
_he
otlowing
or
each
period
or
whichan
income
tatement
s
presented:
A)
freneral
nformations3
bout he
operatirq
segm€nt'
.
B)
Information
bout
seoment
orofit
or
losFs{, egment
ssetsss
nd
segment
iabilities'
ci Eb-.on.ili"tioni
or
The
totats
of
iegment
revenuc,
segrnent
profit
or
loss,
segrnent
asiets,
segment
*,ff iotr 'ermate.iatsegmeit i temstocorrespondingentityamounts.
f
,
ENTITY-wIDE
IscLosuREs.
&titV-w.iap
ig;i-q.Firet
re
addltional
nfonflatlon
hat
is required
o
be discloied-by
"l."qttitf"
informalon
is-i&Trovided
as
part
of
the
reportable
segrnent
information.
An entity
shall
information
atoui-
ri
pioouds
ani
seryices,
2)
geographical
reas
and 3)
MAIoR
cusToMERSs6.
Thechief
opeitating
lecision
maker
dentifies
fimctioni
not nec€ssfirily
manager
with
a specific
itle.
'l'hat
function
s
t. allocaieu*ourcu to andass€sshe
perforniaflcc f the
opercting
egments
f
an
enti8'
(PFRS
E'
par'
7)
An
entity
shall
disclose
he
ollowing
general nformation
bout
an operating
egmont:
PFRS
8,
pay
7,2)
L Faciors
qsed
o.idfitit
tlre
re$rtable.segnents,
ncluding
he basisof
organization.
e,g''
whether
management
as
,chosen
to
organize
he
enfry
dognd
diffeiences
n
productS
nd
services,
eographical
reas.
egulatory
nvimnment,
or
a combinition
of
factQrq, nd
whether
perating
egments
avebeen
aggregated')
2.
T'ypes
f
products
nd,servjces
rom
which
each
eportable
ogrnent
erives
ts
revenue'
Rn entliy
shirli
disclosethe
ollowing
if
included
n
themeasure
f
profit
or
loss:
PFRS
S,
par' 23)
(a)
RevEnues
rom
external
ustomirs
and
ransactions
ith
other
ope'rating
egtnents
fthe
saneentity
(b)
Interest
evenue
nd
nterest
xpense
(c)
Depreciation
nd
amortization
iil
rrn":,.ii"iit"r.:orio"ome.and
expenses
nd
mateYial
oncash
tems
other
han
depreciation
ndamortization
i;i
ffiili"
ritont
ot'r"ss
of
associates
nd
oint
venture
ccr:unted
or
by the eq*ity
method
(0
lncome
ax
expense
An entitvshalldisclosehe ollowingabouteach eportableegmentf thespecified mounts re ncludedn t{temeasure
of
sesment
ss€ts
eviewed
y
chief
operating
fficer:
PFRS
.
par.24)
i;i i'hilffi#
oiinu"u*"nrs
in associates
nd
oint
venture
accounted
or by the equity
method'
and
[i
il;;;;r";i;;];j;ilr;;n-"unrn,
assers
ttrer
han
inartcial
nstruments.
eferred
ax assets.
ost-employment
,
benefit
assets
nd
ights
arising
under
nsurance
ontracts'
i
If
revenues
rom
transaiions
with*a
single
extemal
ustomer
amount
o
10%or
more
of,
an
entlty's
evenue,
he
entity
if such
repoft
'u