PAS Volume I – I – 2009 2009 1. Presentation of F/S 2. Inventories 16. Property, Plant & Equipment 18. Revenue 20. Government Grants & Assistance 23. Borrowing Cost 28. Investment in Associates 32. Financial / Instruments 36. Impairment of Assets 37. Contingent Assets & Contingent Liabilities 38. Intangible Assets 39. Financial Instruments 40. Investment in Property 41. Agriculture
PAS Volume II- 2009 12. Income Taxes 17. Losses 19. Employee Benefits 20. Accounting Reports & Retirement Benefit Plans 33. Earnings per Share
PFRS 5. Nonmonetary Assets held for sale & Discontinued Operation 6. Evaluation of Mineral Resources 7. Financial Instruments Instruments 8. Operating Segments
PFRS 2. Share Base Pigment 7. Financial Instruments Instruments
Page 1 of 46
PAS Volume III- 2009 7. Cash flow Statement 8. Changes in Accounting Estimate 10. Events After B/S date 14. Segment Reporting 24. Related Party Disclosure 29. Financial Reporting 34. Reporting
PFRS 5. No-amount Assets held for sale & P/S continued Operations
Cash Count Sheet Petty Cash Fund Balance per Ledger Less: to take up unreplenished unreplenished exp. to take up advances to employees to take up shortage cash count Balance as Adjusted
UBERITA: TECHNIQUE
xxx (xxx) (xxx)
Receipts: BO P
BA (xxx)
DIT xxx
C P
(xxx)
xxx
C
xxx
CM Cash Count Sheet
Bills Fractional Fractiona l Denomination Total bills & Fractional Denomination Check to deposit Unreplenished Unreplenished Vendors I.O.U‟s Total Amount of Fund count Total Amount of Funds per book PCF Ledger xxx Unclaimed Cash xxx Undeposited Check xxx Proof: Bills and Coins Check for Deposit Total Cash Counted Less: Non-fund Items Unclaimed (fees) Undeposited Check Balance for PCF
xxx xxx xxx xxx xxx xxx xxx xxx
xxx
=
Disbursement: BO P
xxx
BA (xxx)
OC C P
xxx (xxx)
DM C
xxx xxx xxx xxx xxx (xxx) (xxx)
Page 2 of 46
xxx xxx
=
xxx
Cash Count Sheet Petty Cash Fund Balance per Ledger Less: to take up unreplenished unreplenished exp. to take up advances to employees to take up shortage cash count Balance as Adjusted
UBERITA: TECHNIQUE
xxx (xxx) (xxx)
Receipts: BO P
BA (xxx)
DIT xxx
C P
(xxx)
xxx
C
xxx
CM Cash Count Sheet
Bills Fractional Fractiona l Denomination Total bills & Fractional Denomination Check to deposit Unreplenished Unreplenished Vendors I.O.U‟s Total Amount of Fund count Total Amount of Funds per book PCF Ledger xxx Unclaimed Cash xxx Undeposited Check xxx Proof: Bills and Coins Check for Deposit Total Cash Counted Less: Non-fund Items Unclaimed (fees) Undeposited Check Balance for PCF
xxx xxx xxx xxx xxx xxx xxx xxx
xxx
=
Disbursement: BO P
xxx
BA (xxx)
OC C P
xxx (xxx)
DM C
xxx xxx xxx xxx xxx (xxx) (xxx)
Page 2 of 46
xxx xxx
=
xxx
Replenishment Expenses Cash in Bank
Cash & Cash Equivalent Unreleased Check Cash A/P
xxx xxx
xxx xxx
Postdated Check Delivered Cash xxx A/P Checks Long Outstanding Cash xxx Miscellaneous Miscellaneous Income Accounting for Cash Shortage Cash Short/Over Cash Due for Cashier Cash short /over Loss from Cash Shortage Cash Short/Over
xxx
Adjustment Expenses xxx Petty Cash Fund
xxx
Increase in Fund Petty Cash Fund Cash in Bank
xxx
xxx
Decrease in Fund Cash in Bank xxx Petty Cash fund
xxx
Fluctuating Fund System Set-up / Establishment Petty Cash Fund Cash in Bank
xxx
xxx xxx xxx xxx xxx
Accounts for Cash Change Cash xxx Cash Short/Over xxx Cash short /over xxx Miscellaneous Miscellaneous Income Cash Short/Over xxx Payable to Casher Input Fund System (Set-up / Establishment) Petty Cash Fund xxx Cash in Bank xxx
xxx
xxx
xxx
Payment of Expenses Expenses xxx Petty Cash fund
xxx
Replenishment Petty Cash fund Cash in Bank
xxx
xxx
xxx Decrease in Fund Cash in Bank xxx Petty Cash Fund
Page 3 of 46
xxx
AR – Accounts Receivable
Accounting for Bad Debts
⦁ Allowance for Freight Change ⦁ Allowance for Sales Return ⦁ Allowance for Sales Discount ⦁ Allowance for Doubtful Accounts
⦁ Allowance Method ⦁Direct write-off method
Method of Recording Credit Sales Gross Method A/R xxx Sales
xxx
Net Method A/R Sales
xxx xxx
Collection at a Discount Period Cash xxx Sales Disc. xxx A/R xxx
Collection at a Discount Period Cash xxx A/R xxx
Collection not at Discount Period Cash xxx A/R xxx
Collection not at Discount Period Cash xxx A/R xxx Sales Disc. Forfeited xxx Classified as “Other Income”
Page 4 of 46
Presentation A/R xxx Allowance D/A (xxx) N/R xxx Acc. Interest Rec xxx Advances to Officers & employees xxx Dividends Rec xxx Total Trade & other xxx receivable
Receivable Financing
Loans Receivable Principle Amount Pledge of Accounts Receivable Organization fees Received Cash xxx from borrower Discount on N/P xxx Direct Org. Income Notes Payable-Bank xxx Initial Carrying Amount of Loan Assignment of Accounts Receivable Non-Notification Basis Notification Basis Accounts Receivable-Assigned xxx A/R – Assigned xxx Accounts Receivable xxx A/R To record the loan: Cash xxx To record the loan Notes Payable – Bank xxx Cash xxx Service Change xxx Payment / Collection of Assets Note Payable - bank Cash xxx A/R-assigned xxx Payment / Collection Payment of Loan N/P – Bank xxx Interest xxx Cash(Collected Net)
xxx
Page 5 of 46
xxx xx x xxx xxx
xxx
Loans Receivable Unnamed Interest Fund Carrying Value
xxx (xxx) xxx
Loans on Impairment xxx Accrued Interest Rec. xxx Allow For long impairment xxx xxx
Factoring Casual Factoring Cash Allow. for D/A Loss in Factoring A/R
Discount on Note Cash Discount on N/P N/P – Bank
xxx xxx xxx xxx
Factoring as a Continuing Agreement Cash xxx Sales Discount xxx Commission xxx Receivable from factor xxx A/R xxx Dishonored Notes Receivable Account Receivable xxx Notes Receivable xxx Interest Income xxx Accounting for Note Discounting with recourse Cash xxx Notes Receivable Discounted xxx Interest Income xxx
Cash
without recourse xxx Note Receivable Interest Income
xxx xxx
Dishonored Notes (to record payment to first bank) A/R xxx Cash xxx (to cancel contingent liability) A/R xxx Cash xxx Notes Receivable Discounted Note Receivable xxx
xxx
Page 6 of 46
xxx xxx xxx
Pledging of A/R Presentation: (No effect on A/R) N/P xxx Disc. on N/P xxx Cash xxx Assignment of A/R Presentation: A/R – unassigned xxx A/R- assigned xxx Allow. D/A (xxx) NRV xxx Equity in Assigned Accounts A/R – assigned xxx Less: N/P to bank (xxx) Equity in Assigned xxx Asset
Factoring deduction on A/R even if it’s done on w/o recourse or with recourse basis Discounting of A/R Net Proceeds Bank value of the N/R Less or Given Discount N/R N/R – discounted NRV
xxx (xxx) xxx
xxx (xxx) xxx
Cash xxx Interest Exp. xxx Liability for N/R discounted Interest Inc.
Page 7 of 46
xxx xxx
Discounting on Note Cash xxx Disc. on N/P xxx N/P – Bank
xxx
Interest Exp. Disc. on N/P
xxx
xxx
N/P Face Value of Note Present Value of Note Rec. Unnamed interest Inc. Present Value of N/R Down Payment Sales Price / Cash Price Less: Cost of Equipment Gain on loss on Sale
xxx xxx xxx xxx xxx xxx
Method of Recording Credit Sales Gross Method Net Method A/R xxx A/R xxx Sales xxx Sales xxx Within disc.period Cash xxx Cash xxx A/R xxx Sales Discount xxx Cash xxx A/R xxx A/R Sales disc. Forfeited Cash N/R
xxx xxx Equipment Gain on Sale
xxx xxx
Page 8 of 46
“Other income” xxx xxx
xxx xxx
Inventories Periodic System Perpetual System Purchase
Purchases A/P
xxx
Merchandise Inventory A/P
xxx
xxx
Merchandise Inventory Cash
xxx
xxx
xxx
Freight
Freight in Cash
xxx
xxx
Return
A/P
xxx Purchase Return
A/P xxx
xxx Merchandise Inventory
xxx
Sales
A/R
xxx Sales
A/R xxx COS
xxx Sales
xxx
xxx Merchandise Inventory
xxx
Sales Return
Sales Return A/R
xxx
Sales Return A/R Merchandise Inventory COS
xxx
Adjustment ending Inventory Merchandise inventory-end xxx Income summary Method of Recording Purchases Gross Method Purchases xxx A/P Accounts Payable xxx Cash Purchase Discount A/P xxx Cash
xxx xxx xxx xxx
xxx
xxx xxx xxx xxx
Net Method Purchases A/P Account Payable Cash Account Payable Purchase Discount lost Cash
xxx xxx xxx xxx xxx xxx
Page 9 of 46
xxx
Cost Formulas (PAS 2) 1. First in, First out (Periodic & Perpetual) 2. Weighted Average Method (Periodic, Perpetual, (every purchase) [moving Average]) Accounting for Inventory Writedown (NRV
Purchase Commitment Loss on Produce Commitment xxx Est. Liab for Purchase Commitment Purchases xxx Est. Liab for purchase Commitment xxx A/P Purchases Est. Liab for purchase commitment A/P Goin on Purchase Commitment
xxx xxx
Note: CSG, should be the same method will be use(d)
Page 10 of 46
xxx
xxx
xxx xxx xxx xxx
Inventory Estimation Gross Profit Method
Retail Inventory Method
Goods Available for Sale
xxx /
Less: Ending Inventory
(xxx)
Cost Ratio
Goods Available for Sale at Cost
/
= Goods Available for Sale at Selling Price
xxx
Cost of Sales /
Goods Available for Sale at actual/SP Less: Net Sales (Gross Sale - Sales Return Only)
xxx (xxx)
Sales Allowance & Sales Discount (x)
Ending Inventory at SP
xxx
Sales Return ( / [Actual Return of Goods])
Multiply by Cost Ratio
x% xxx
Ending Inventory at Cost
Based on Cost of Sales
=
Mark Up
COGAS at Cost Less: Ending Inventory at Cost
/
Conservative Approach
1 + Mark Up Cost Ratio
/
/
=
GAS at Cost GAS at Retail + Net Markdown
Average Approach
Cost Ratio
=
FIFO
=
GAS at Cost GAS at Retail
Net Purchase at Cost
Page 11 of 46
xxx (xxx) xxx
Approach
GAS at Retail - Beg. Inventory
Employee Benefits (PAS 19) Employee benefits are all forms of considerations given by the entity on employee for service rendered by employees.
a) b) c) d)
B. Postemployment Benefits (Plan) Are employee benefits, other than termination benefits, which are payable after completion of employment includes:
Short-term employee benefits Postemployment benefits Long-term employee benefits Terminator benefits
1. Retirement Benefits (Pension) 2. Postemployment Life Insurances 3. Postemployment Medical Care
Postemployment Benefit plan 1. Defined Contribution Plan 2. Defined Benefit Plan (Complex)
A. Short-Term Employee Benefits (12 months after)
1. Short Term Compensated Absences a) Non-Accumulating Methods b) Accumulating Method
1. Vesting 2. Non Vesting
2. Profit Sharing and Bonus Plan Projected Benefit Obligation- based on future salary.
Accumulated Benefit Obligation- based on current salary.
Page 12 of 46
Contributing Plan & Non-Contributing Noncontributing only employees shoulder all the retirement benefit cost; Contributing both at them contribute but not necessarily equal. Funded & Unfunded Unfunded the entity returns the obligations for the payment of retirement benefits without establishment fund. Funded sets aside funds fo
Defined Contribution Plan ( fixed contributions)
a) The contribution is definite but the benefit is indefinite. Actually in this case, the entity makes the contributions to a trustee which administers, manages, and invests the funds. [Employee bears the investment risks] Defined Benefit Plan (to provide the agreed benefits employees) a) The contribution indefinite but the benefit definite. Actually, in this case, the entity must make contributions such that the contributions plus earnings would be sufficiently large to cover future r etirement benefits. [thus the entity assumes the investment risks] Multi-employer Plan (Mixed) Postemployment benefit plans under the law
a) (SSS) Social Security System b) R.A.7641
1. ABO – Accumulated benefit Obligation 2. PBO – Projected Benefit Obligation (PAS 19)
Accounting for defined Contributed Plan Benefit Expense Cash
xxx xxx
Accounting for Defined Benefit Plan (Complex) [Actuarial Assumptions] Discounted basis (unfunded, funded & partly] Components of “Benefit Expense” 1. 2. 3. 4.
Current Service Cost – “Service Cost” Interest Cost Expected return on plan assets Actuarial Gains & Losses is required in accordance with the entity‟s policy Page 13 of 46
5. Post Service Cost beg. contribution unto fund actual return
xxx xxx xxx
xxx xxx
end benefits paid
6. Effect of any containment or settlement Actuarial Valuation Method (PAS 19 mandated to use Projected unit credit method) - Sometimes known as accrued benefit method.
1. Accumulated Benefit Obligation- “current salary” 2. Projected Benefit Obligation- “future salary”
Current Service Cost – is the increase in the PV of the defined obligation resulting from employee service in the current period. Interest Cost – is the increase during the period in the PV of the defined benefit obligation which arises because the benefits are one period closer to settlement. Plan Assets 1. 2. 3. 4.
Held but separate Pay only employee benefits Not available to entity‟s creditor even in bankruptcy Can be return only if remaining can satisfy all the benefits obligation. Actual Return Expanded Return Actuarial Gain or Loss FV Plant Assets
xxx (xxx) xxx
Pas 19 Vs US GAAP
PAS 19
Additional minimum Liability X
Prepaid Pension
With limit
US GAAP
Without limit
Approach Used Corrigidor and full recognition Corrigidor Approach
Page 14 of 46
only
Fair Value of Plan Assets
xxx
Presented as:
Actuarial Loss/Gain (+,-)
xxx
(NCA) – Prepaid Benefit Cost
Less: Projected Benefit Obligation
(xxx)
(NCL) – Accrued Benefit Cost
Prepaid/Accrued Benefits Cost
xxx
Memorandum records of the entity. is the item that appears on F/s of the employer entity.
Current Services Cost Interest Cost Expected return Total Benefit Expense
xxx xxx (xxx) xxx
Overfunding Benefit Expense Prepaid/Acc. Benefit Cost Cash
xxx xxx
Prepaid/Acc. Benefit Expense
Underfunding Benefit Expense Cash
xxx
xxx
xxx
Current Service Cost Interest Cost Expected Return Amortization of Past Service Cost Amortization of Actuarial loss Page 15 of 46
xxx
xxx xxx (xxx) xxx xxx
Amortization of Actuarial Gain Total Benefit Expense
(xxx) xxx
Projected benefit end xxx Benefit Paid xxx
Actual Return on Plan Assets Expected Return on Plan Assets Actuarial Gain/Loss
Projected Benefit Obligation
xxx xxx xxx
Beg. Service Current Cost Interest
xxx (xxx) xxx
-
Gain Loss
Actuarial Valuation Method or Accrual Benefit Method
Treatment of Actuarial Gain or Losses a) Corridor Approach (Required by Standard) xxx FVPA PBC xxx xxx Compare whichever 10% is higher Corridor xxx Less: Net Cumulative unrecognized Actuarial gains & losses (xxx) Excess Actuarial Gain or Loss xxx Average [life] service period / xx Amortization xxx
[Note: this should be be greater that 10% of corridor.]
Note: if Actuarial gain is deducted to or in compensation benefit expense! To be shown in credit memorandum records. If Actuarial Loss is added to, or in the computation of the benefit expense! To be shown in a debit memorandum records. b) Full Recognition Approach Actuarial Gain or Loss shall be reported as part of the “Comprehensive Income”.
Actual Return on plan Assets Less: Expected return
xxx (xxx) Page 16 of 46
Actuarial Gain or Loss
xxx
Debit
Credit
Unamortized Actuarial loss beg. Amortization of Actuarial loss/gain Actuarial Gain Plan Assets during the year
FVPA more than PBO Fair value of Plant Assets Unrecognized Actuarial loss Unrecognized Actuarial gain Unrecognized Post Services Cost Projected benefit Obligation P/ABC Unrecognized Actuarial gain Unrecognized Actuarial losses Unrecognized Post Service Cost PV of future refunds & redonations in future contributions Total Limit
xxx (xxx)
Actuarial Gain beg.
xxx
xxx xxx (xxx) xxx
xxx (xxx) xxx
xxx xxx xxx (xxx) xxx xxx
“net”
xxx xxx
Retirement Benefit Plans (PAS 26) Deal with the accounting & reporting by the retirement benefit plans.
Page 17 of 46
SHAREHOLDER’S EQUITY
Memorandum Method -
Memo entry
-
Journal Entry Method
Unissued Share Capital Authorized share Capital
xxx xxx
1. Issuance of Share Capital at Discount Cash Discount on Share Capital Share Capital
xxx xxx
deduction on SHE! xxx
2. Issuance of Share Capital for Non-Cash Consideration Land
xxx Ordinary Share Capital Share Premium
xxx xxx
3. For Services Legal Expenses
xxx Page 18 of 46
Ordinary Share Capital Share Premium
xxx xxx
Delinquent Subscription
Subscription Receivable Subscribe Share Capital
xxx
Cash
xxx
xxx
Subscription Receivable
“Defaults” (NO ENTRY)
Advances on Delinquency Sale Cash
“Highest Bidder” Cash/TS Subscription Receivable Interest Income Advances on Delinquency Sale Subscribed Share Capital Share Capital
xxx
xxx xxx
xxx xxx xxx xxx xxx xxx
CALLABLE PREFERENCE SHARE
Issuance: Cash
xxx Preference Share Share Premium-Preference Share
Redemption: Preference Share
xxx xxx
xxx Page 19 of 46
Share premium-Preference Share Retained Earnings Cash
xxx xxx xxx
Cost exceeds Par Value 1. APIC 2. R.E
CONVERTIBLE PREFERENCE SHARE
CASE 1 P/S-C S/P-P/S
xxx xxx OS-C Share Premium
CASE 2 P/S-C S/P-P/S R.E
xxx xxx
xxx xxx xxx O/S
xxx
Rights Issue – “Stock Right” - Memo Entry –
Page 20 of 46
SHARE WARRANT ISSUED WITH PREFERENCE SHARE
Allocation to their MV Cash P/S-C S/P-P/S Share Warrants Outstanding Cash Share Warrants Outstanding O/S-C S/P No MV: MV of O/S Less: Option Price Intrinsic Value of Warrant Multiply no. share Claimable Total Value of Warrants
xxx xxx xxx xxx
SHARE WARRANTS ISSUED WITH BONDS PAYABLE
xxx xxx
xxx xxx
xxx (xxx) xxx *xxx
xxx
TREASURY SHARES
(What is prohibited to be done “ directly” cannot be done by indirection.) Accounting for Treasury Shares
T/S
xxx Cash
xxx
At Cost: Page 21 of 46
Cash Discount on B/P B/P Share Warrants Outstanding Exercise: Cash Share Warrants Outstanding O/S-Capital Share Premium
xxx xxx xxx xxx
xxx xxx xxx xxx
Cash
xxx T/S
At More Cost: Cash T/S S/P-T/S At Below Cost: Cash S/P-T/S R.E T/S
xxx
xxx xxx xxx
xxx xxx xxx xxx
Retirement of Treasury Shares
O/S-Capital T/S S/P-T/S
xxx xxx xxx
Cost of T/S exceeds the Par Value 1. APIC 2. APIC-T/S 3. R.E
Page 22 of 46
[DONATED SHARES]
Memo Entry Only – Reissuance Cash Donated Capital Cash
xxx xxx xxx
Land Donated Capital
xxx xxx
Fractional Stock Dividend
R.E
xxx Stock Dividends Payable
xxx
Share Premium Stock Dividends Payable
xxx
R.E
xxx Stock Dividends Payable
Stock Dividends Payable Share Capital Fractional Warrants Outstanding Treasury Shares as Stock Dividend
R.E
is illegal xxx
xxx xxx xxx xxx
xxx Stock Dividend Payable
xxx
Page 23 of 46
Stock Dividend Payable Treasury Shares
xxx xxx
QUASI-REORGANIZATION (Free-Start)
1. Recapitalization (Share Premium) 2. Revaluation of PPE (Revaluation Surplus) Thru recapitalization R.E (deficit)
Equity Settled – Option - OSOO SHARE BASE Compensation Cash Settled – Share Agreement Right – Liability FV of the date of Grant OSSO Cash Settled Intrinsic Value=Option or Strike Price – MV of Share
Contributed Capital SHE
SC APR/SP
Unissued/Unrealized (OCI) Earned Realized Capital
RS UG/UL AFS FC G/C AG/AL- Corridor Approach G/L – Cash flow Hedge
Transported
Page 24 of 46
“positive”
SHARE BASED – COMPENSATION (PFRS 2)
1. 2. 3. 4.
I.
Equity Settled (Share Options) Cash Settled (Share Appreciation Rights) How is the compensation measured? When is the compensation recognized?
Share Options 1. Fair Value Method (PFRS 2) 2. Intrinsic Value Method (MV vs. OP)
Recognition Shares- Share Options Share Options Outstanding
Cash Share Options Outstanding O/S- Capital Share Premium
xxx xxx xxx xxx xxx xxx
Intrinsic Value Method No Vesting period With Vesting Period Some employees left With condition & Share options vary With condition & exercise price varies Note: Intrinsic Value Method any difference or increase in intrinsic value period is recognized as additional compensation immediately. (P/L)
Page 25 of 46
II.
Cash Settled Transaction (Grant of Share Appreciation Rights) (Fair Value of the Liability)
Recognition (P/C) Salaries Accrued Salaries Payable
Accrued Salaries Payable Cash
xxx xxx xxx xxx
Query: MV=FF or PV
Accrued Salaries xxx Gain on reversal of Share Appreciation Right
xxx
Note: The Predetermined price is the MV of share at the date of grant.
Acceleration of Vesting – “cancelation” or “settlement” as on acceleration of vesting!
a) The entity shall recognized immediately the compensation expense that otherwise would have been recognized for services recei ved over the remainder of the vesting period. (Usual) b) Any made to payment to the employee on the cancellation or settlement of the grant shall be accounted for as the repurchase of equity interest. (deduction from equity; excess of payment is expense) xxx Share Options Outstanding Salaries xxx
Page 26 of 46
Cash
xxx
Cash & Share Alternative(to settle!)
1. Cash Alternative – cash payment is equal to market value of contain numbers of shares subject to certain condition. 2. Share Alternative- equity share given to employee.
Choice of Settlement – Account 1. Entity – “Not compound instrument” 2. Employee - Compound financial instrument ( partly cash- liab, & partly “share”-equity Residual Amount).
Note: F.V of the share alternative
xxx
F.V of the Liability Component or “grant date”
(xxx)
Equity Component
xxx
Financial Accounting- The method chosen by the [company‟s] employee will determine the financial accounting.
Share Premium
xx
2. Equity Alternative Accrued Salaries Payable xx Share Options Outstanding xx Share Capital Share Premium
1. Cash Alternative Accrued Salaries Payable xx Share Options Outstanding xx Cash
xx Page 27 of 46
xx xx
Cash Payment
xx
FV of Liability
(xx)
Implied Interest xx
Purchase of Equipment 1. Fair value of asset received Less: Fair Value of Equipment Equity Component
3. Share Alternative Accounts Payable xx Share Options Outstanding xx Share Capital Share Premium
xx xx
Book Value per Share
xxx (xxx) xxx
1. Equipment xx Accounts Payable xx Share Options Outstanding xx 2. Cash Alternative Accounts Payable xx Share Options Outstanding xx Interest Expense xx Cash Share Premium
Book Value per Share = Total Shareholder‟s Equity No. of Shares Outstanding Book Value per = Preference Share
Preference Shareholder‟s Equity No. of Preference Share Outstanding
Book Value per = Ordinary Share
Ordinary Shareholder‟s Equity No. of Ordinary Shares Outstanding
Note:
xx xx
1. Preference Share is assumed to be Non-cumulative & Non-Participating.
Page 28 of 46
2. Dividends in arrears in prior years shall be specifically disclosed.
Shares Outstanding
xxx
Shares Outstanding
Share Capital Issued xxx Add: Subscribed Share Capital xxx Total xxx Less: Treasury Shares at Par (xxx) Case 1. Preference Share is Non-cumulative & Non-Participating
Excess over Par Balances xxx Preferred Dividend (xxx) Balances to Common xxx Total SHE Divided by Shares Outstanding Book Value per Share
Preference xxx xxx ____ xxx
xxx P xxx
Ordinary xxx ____ xxx xxx
xxx P xxx
Case 2. Preference Share is Cumulative & Non-Participating
Excess over Par Balance xxx Preference Dividend (Dividend x no. of yrs.) (xxx) Balances to Common xxx Total SHE Divided by Shares Outstanding Book Value per Share
Page 29 of 46
Preference xxx
Ordinary xxx
xxx ____ xxx
xxx xxx
xxx P xxx
xxx P xxx
Case 3. Preference Share is Cumulative & Participating
Ratio Ratio!!
Excess over Par xxx
Balances Preference Dividend (Dividend x no. of yrs.) (xxx) Ordinary Dividend (Preferred rate% x CS) (xxx) Balance for Participation xxx Preference (Ratio x B for P) Ordinary (Ratio x B for P) Total Shareholder‟s Equity Divided by Shares Outstanding Book Value per Share
Case 4. Preference Share is Cumulative & Participating up to specified rate!
Preference Ordinary xxx xxx Balances Preference *Ordinary
xxx
Excess over Par xxx (xxx) (xxx)
Preference xxx xxx
Ordinary xxx xxx
xxx Balance for Participation xxx _____ xxx xxx P xxx
xxx
Preference (Ratio% x PS) Ordinary (Balance to CS) Total Shareholder‟s Equity Divided by Shares Outstanding Book Value per Share
xxx xxx xxx P xxx
xxx ____ xxx xxx P xxx
xxx xxx xxx P xxx
Note: Ratios are developed from the aggregate par value of share capital. Liquidation Premium Cases: Preference Share is Cumulative, Non-Participating, & with liquidation value per share. Page 30 of 46
Illustration no. 3 Case 1. Preference share has preference as to assets. (Dividend in arrears are fully payable)
Balances Preferred Dividend Balances to Common Total SHE Divided by Shares Outstanding Book Value per Share
Excess over Par Preference Ordinary (xxx) xxx xxx (xxx) (xxx)
xxx ____ xxx
xxx P
(xxx) xxx
xxx xxx
Case 2. Preference Share & as preference as to Dividends
Balances Share in Deficit Preference (Ratio) Ordinary (Ratio) Total SHE Divided by Shares Outstanding Book Value per Share
Excess over Par (xxx) xxx xxx
Preference Ordinary xxx xxx (xxx) ____ xxx
xxx P xxx
(xxx) xxx
xxx P xxx P
Page 31 of 46
xxx
a.
*EARNINGS PER SHARE* PAS 33
1. Basic Earnings per Share 2. Diluted Earnings per Share Uses of EPS
1. Determinant of MP of OS indicating the alternatives of the OS as investment. 2. Measures of Performance of management. 3. Basis of dividend policy.
Date Monthly xx xx xx
Shares xxx xxx xxx
b. Months Outstanding xx xx xx
Average Share Outstanding (xxx /12)
(a x b) Peso xxx xxx xxx xxx
xxx
Example Potential O/S
1. For liability or equity instrument, including preference shares that are convertible into ordinary share. 2. Share warrants 3. Share Options 4. Shar es which would be issued…
Stock Dividend & Split – shall be recognized retroactively or split shall be (recognized) treated as a change from the date the original shares were issued. Note:
*Basic Earnings per Share*
Net Income is equal to the amount after deducting
Basic EPS = Net Income Ordinary Shares Outstanding
dividends on preference share. Cumulative P/S = Preference for the current year. Noncumulative P/S = Preference for the current year if there is declaration. If there is a significant change in O/S capital alternative the year the weighted average O/S Outstanding during the period should be used as denominator.
Page 32 of 46
Note: If Convertible bond payable is outstanding during the entire year it is assumed that the conversion take place at the beginning of the year.
Diluted EPS 2 Major Types of Potential Ordinary Shares
1. Convertible Bond Payable & Convertible Preference Share 2. Share options and Warrants (Only when dilutive) 2. Convertible Preference Share
1. Convertible Bond Payable
Net Income O/S actually outstanding Assumed Issued O/S through conversion of P/S Diluted EPS
Net Income xxx Add: Interest Expense on BP xxx [Less] Income Tax (% x xx) (xxx) xxx Adjusted NI xxx Ordinary Share Actually Outstanding xxx Assumed Issued O/S xxx xxx Total O/S Diluted EPS (NI/OS) P xxx
xxx xxx xxx P xxx
Note: Net Income is not deducted by any dividend for the reason that the preferred share will exercise its privilege of conversion.
Note: Options and Warrants are “dilutive” if:
Exercise Price/Option Price < Average Market Price of OS. PAS 33
Page 33 of 46
Options and Warrants Basic EPS Net Income Divided by WACSO Basic EPS
Note: If the Exercise of Options and Warrants is done in the current year it is „average‟ (through) multiplying the incremental shares by average of the incremental share from the “beginning of the year to the exercise date”.
xxx xxx Pxxx
Diluted EPS OS Actually Outstanding xxx Incremental OSC Option Share xxx Less: Assumed Treasury Share (xxx) xxx Total Ordinary Shares Pxxx
Net loss = if both all the rights of the holder are present (potential rights) should always be rank or consider the ranking when can equity diluted EPS: CBF = Net Interest of tax Shares Equivalent
Note: if not whole year it should be multiplied by a ratio on what month it was held and assumed options were exercised Option Price Fair Value of Stock Option Total Option Price
CPS = Dividend Amount Share Equivalent
xxx xxx xxx
Option Shares Multiply by Total Option Price Proceeds from Assumed Exercise Option Divide by average MP Assumed Treasury Shares
O OS & WC = ______________________ Assumed Share Equivalent
xxx
Options, Shares and Warrants Outstanding is always of rank off if it is considered as dilutive!
xxx
Dilutive if: Exercise OP < Average MP
xxx xxx xxx
Page 34 of 46
Operating Lease LESSOR Rent Income
LESSEE Rent Expense
Lease Balances (Amortized over the Term)
Unearned Income
Prepaid Rent Expense
Initial Direct Cost (Paid by lesser) Rent Deposit
Deferred Initial Direct Cost Liability
-
Dep’n / Asset Cost
-
Payment of Rent
Collection of Rentals xxx Amortization of LB xxx Amortization of deferred IDC ( xxx) Dep‟n of lease Property (xxx) Other Cost (xxx) Net Revenue from lease xxx
Asset
Payment of Rentals Amortization of LB
Net Rent Expense
xxx xxx
_____ xxx
Page 35 of 46
LESSOR
LESSEE
Cash xxx Rent Income xxx
Rent Expense Cash
xxx xxx
Lessor
Lessee
1. Lease Bonus
Unearned Income
Pre Payments
2. Contingent Rent
Income When Earned
Expense when Incurred
3. Uneven Rental Payment (Collection) Rent Holiday
Income!!! TotalPayments/ Collections Lease Term
Expense!!! TotalPayments/ Collections Lease Term
4. Leasehold Impairment
X
5. DirectLease Expense
1. Outright Expense 2. Capitalized + CV Offers leased asset Amortized over the leased form
PPE (Dep‟n)
X
Shorter Remaining Term Life of Asset
Page 36 of 46
Sale and Lease Back – “Operating Lease” Book of Seller “Lessee” 1. Record the Sale
2. Payment of Rental- Lessee
3. Dep’n of Lease/Sold Property
1. Cash xxx Acc. Dep’n xxx Machinery Gain on Sale leaseback 2. Rent Expense Cash
3.
Book Buyer Lessor
xxx xxx xxx xxx
--
Page 37 of 46
1. Machinery Cash
xxx
2. Cash Rent Income
xxx
3. Depreciation Acc. Dep’n
xxx
xxx
xxx
xxx
*Sale & Lease Book “Finance Lease”*
Book of Buyer-Lesser
Book of Seller Lessee 1. Record the Sale
Cash xxx Acc. Dep’n xxx Equipment Deferred Gain
xxx xxx
2. Record the Leaseback – Finance Lease
Equipment xxx Lease Liability
xxx
3. First Rental Payment
Interest Expense Lease Liability Cash
xxx xxx
Dep’n
xxx
4. Depreciation
xxx xxx
Lease Receivable xxx Equipment Unearned Interest Income Cash
xxx Lease Receivable
xxx xxx
xxx
xxx
Acc. Dep’n 5. Amortization of Deferred Gain
Equipment Cash
Deferred Gain xxx Gain on Sale & leaseback 6. Reduction of Interest Income --
-xxx -xxx Unearned Interest Income Interest Income Page 38 of 46
xxx xxx
Sale Type Lease
GUARANTEED Lease Receivable xxx CCS xxx Sale Unearned Interest Income Inventory Initial Direct Cost Cash
xxx xxx xxx
xxx
UNGUARANTEED xxx
Loans Receivable xxx COS xxx Sale Unearned Interest Income Initial Direct Cost Cash
xxx xxx
xxx xxx
LESSEE:
Page 39 of 46
Asset ( lower FMV/PV of MLP!!)
xxx
LT Lease Liability Cash (if in advance)
xxx xxx
Interest Expense (CV x effective Rate %)xxx Lease Liability(Balancing Figure) xxx Cash xxx
Dep’n
xxx Acc. Dep’n
NOTE:
xxx
Depreciable Cost __________________________ Term/Life of the Asset of the Lease
Note Payable and Debt Restructure Debt Restructuring
Gain or Loss on Extinguishment of Liability
1. Asset Swap
/
Carrying Value of the Old Liability – Cost of the Asset [not the FV]
2. Equity Swap
“SP”
Carrying Value of the Old Liability – Par value of the issued shares
3. Modification of Terms
/
Carrying Value of the Old Liability – PV of the new Liability
Recognition of Liability (PAS 39) “Share Premium
Substantial Modification of Terms if the gain or loss is 10% or more of the carrying amount of the liability.
Asset Swap (US GAAP)
1. Gain/Loss= Settlement
2. Gain/Loss= Disposal
Equity Swap FMV of Asset xxx CV of Oblig. (xxx) Gain/Loss xxx on Sale FMV of Asset xxx CV of Asset (xxx)
Modification of Terms (Note: US GAAP not discounted!!!)
1. Conversion of Securities (NO GAIN/LOSS TO RECOGNIZE) 2. Extinguishment of Liabilities (Debt) FMV of Securities xxx CV of Liability (xxx) Page 40 of 46
PV of the New Cash Flow (Original Effective Rate) CV of the Note + Interest Gain/Loss Less: Transaction Costs Net Gain/Loss
xxx (xxx) xxx (xxx) xxx
Gain/Loss
xxx
Gain/Loss
xxx
Net Income Cash
1. A.
2. B.
FVPA Beginning xxx End xxx Contribution xxx Benefits Paid xxx Actual Returns xxx
xxx
If not Substantial
3. Net Benefits Expense
PBO End xxx Beginning xxx Benefits Paid xxx Communal xxx Service Cost Interest Cost xxx UPSC xxx “ PBO – AG” “ PBO – AL” Note: PBO PBO
xxx
= AG = AL
4.
+ +
S - xxx - Service Cost P - xxx - Past Service Cost Vested & Amortization UPSC + I - xxx - Interest Cost D - xxx - Deferred AG/AL - Amortization -G +L
E - xxx - Effect of Curtailment
-G +L
-
R - xxx - Return on Plant Assets [FVP Avg x ER of Return %] xxx Net Benefit Expense (Obligation)
5. PE beginning AE ending Contribution
xxx xxx
PE/AE xxx AE beginning xxx PE ending
FVPA UAL UPSC
Net Benefit Obligation
Page 41 of 46
DR xxx xxx xxx xxx
PBO UAG -o-
CR xxx xxx -oxxx
DR > CR = PE xxx CR > DR = AE
Note:
Permanent
D < NI
Taxation
D > NI
Temporary “Return of Investment” “Excess”
Actual return
FVPA Beginning Balance xxx xxx (?) Ending Balance Amt of Contribution xxx xxx Payment/Settlement Expected Return xxx Actual Gain
xxx
1
xxx Actual Loss
x Amount of Services
x
x
Total Service Cost
x
x
PBO Ending Balance (?) xxx Payment/Settlement xxx Contribution
xxx xxx
Beg. Balance PSC
xxx xxx
CSC Interest Cost
2
Vested Not Vested
Page 42 of 46
3
x x x x
4
5
x x x
x x x x
6 x x x x x
x
x
x
x
x
x
PBO, End FVPA, End UPSC, End UAL (G) Prepaid/ Accrued xxx
xxx (xxx) (xxx) (xxx) xxx
xxx
Actual Gain
xxx
xxx
Actual Loss
1
2
3
4
5 x x x x
6 x x x x x
x
x x
x x x
Contributor's Amount x
x
x
x
x
x
Plan Asset
x
x
x
x
x
x
Summary Employee Benefits
Salaries and Wages
Short Term Benefits
Accumulating Short Tern Compensated Absences
Form Contribution Post
Vesting
Funding
Non-Vesting
Non-Accumulating
Formal Informal Contributory Non-Contributory
Funded Unfunded
Contribution Page 43 of 46
Benefit
Risk Investment
xxx
Employment Benefits Classification Employee Benefits
Defined Contribution Plan(Trustee)
Definite
Indefinite
Employee
Defined Benefit Plan
Indefinite
Definite
Employer
Difficulty Other than
Method of Accounting
Long Term Employee Benefits
AG/AL(?) Discounted (?)
Defined Contribution Plan
Straightforward
x
/
Defined Benefit Plan
Complex
/
x
Immediate Recognition/ Full
Corrigidor Approach
Recognition Approach
Other Comprehensive Income
Net Benefit Eqty (P&L)
Termination Benefits
A Type 1
L A L
=
=
( )
+
+
( )
}
=
OE
=
OE
CB
=
=
[ [
)
+
]
+ (
)
]
(
Page 44 of 46
G L G – Contributor Holiday L – Additional Contribution Recognition "E,AE, PE" "SPIDER"
Type 2 Error Non-Capitalization of Major Repair [Should be Asset] or with non-recording of [Depreciation/Amortization]
+ (
) (
)
Type 1 Error Capitalization of Reports and Maintenance of [Should be] expense (with over recording of Depreciation or Amortization)
Income
) + +
xx Other Comprehensive Income UG (UL) AFS FOREX Gain(Loss) Piecemeal Realization of RS Full Recognition AG (AL)
(
xx (xx) xx (xx) xx (xx) xx (xx) Page 45 of 46
