CHAPTER 3

PAS 1, paragraph 113, provides that an entity shall, as far as practicable, present notes in
a systematic manner.
PAS 1, paragraph 112, provides that the notes to financial statements shall:
a. Present information about the basis of preparation of the financial statements and the
specific accounting policies used.
b. Disclose the information required by Philippines Financial Reporting Standards that is
not presented in the financial statements.
c. Provide additional information which is not presented in the financial statements but is
relevant to an understanding of the financial statements.
PAS 1, paragraph 114, provides that an entity normally presents notes in the following
order to assist users understand the financial statements and to compare them with the
financial statements of other entities:
a. Statement of compliance with PFRS
b. Summary of significant accounting policies used
c. Supporting information or computation for line items presented in the financial
statements
d. Other disclosures, such as contingent liabilities, unrecognized contractual
commitments and nonfinancial disclosures.
PAS 1, paragraph 16, provides that an entity whose financial statements comply with
Philippine Financial Reporting Standards shall make an explicit and unreserved statement of
such compliance in the notes.
PAS 1, paragraph 122, provides that an entity shall disclose in the summary of significant
accounting policies the judgments that management has made in the process of applying
accounting policies and that have a significant effect on applying accounting policies and
that have a significant effect on the amounts recognized in the financial statements.
PAS 1, paragraph 125, provides that an entity shall disclose information about the
assumptions it makes about the future, and other major sources of uncertainty at the end of
reporting period that have a significant risk of resulting in a material adjustment to the
carrying amount of assets and liabilities within the next financial year.
PAS 1, paragraph 138, provides that an entity shall disclose the following:
a. The domicile and legal form of the entity, its country of incorporation and the address
of the registered office or principal place of business.
b. A description of the nature of the entitys operations and its principal activities.
c. The name of the parent and the ultimate parent of the group.
Paragraph 137, provides that an entity shall disclose the following:
a. The amount of dividends proposed or declared before the financial statements were
authorized for issue but not recognized as distribution during the period and the
related amount per share.
b. The amount of any cumulative preference dividends not recognized.
CHAPTER 4
PAS 24, paragraph 20, provides the following examples of related party transaction:
1. Purchase and sale of goods
2. Purchase and sale of property and other asset
3. Rendering or receiving services
4. Leases
5. Transfer of research and development
6. License agreement
7. Finance arrangements, including loans and equity contributions in cash or in kind

8. Guarantee and collateral

9. Settlement of liabilities on behalf of the entity or by the entity on behalf of another
party.
PAS 24, paragraph 12, requires disclosure of related party relationships where control
exists irrespective of whether there have been transactions between the related parties.
PAS 24, paragraph 17, provides that if there have been transactions between related
parties, an entity shall disclose the nature of the related party relationship as well as
information about the transactions and outstanding balances necessary for an understanding
of the financial statements.
PAS 24, paragraph 16, provides that an entity shall disclose key management personnel
compensation in total and for each of the following categories:
a. Short-term employee benefits
b. Postemployment benefits, for example, retirement pensions
c. Other long-term benefits
d. Termination benefits
e. Share based payment transactions, for example, share options
PAS 24, paragraph 3, requires disclosure of related party transactions and outstanding
balances in the separate financial statements of a parent, subsidiary, associate or venture.
Paragraph 4, provides that intragroup related party transactions and outstanding balances
are eliminated in the preparation of consolidated financial statements of the group.
CHAPTER 5
PAS 10, paragraph 3, defines events after the reporting period as those events, whether
favourable or unfavourable, that occur between the end of reporting period and the date on
which the financial statements are authorized for issue.
PAS 10, paragraph 17, provides that an entity shall disclose the date when the financial
statements are authorized for issue and who gave the authorization.
CHAPTER 6
PAS 1, paragraph 82A, provides that the other comprehensive income section shall
present line items for amounts of other comprehensive income in the period, classified by
nature.
PFRS 9, the unrealized gain or loss is reclassified to retained earnings upon disposal of the
investment.
PAS 1, paragraph 81, provides that an entity has two options of presenting comprehensive
income, namely:
1. Two-statement approach
a. An income statement showing the components of profit or loss.
b. A statement of comprehensive income beginning with profit or loss as shown in
the income statement plus or minus the components of other comprehensive
income.
2. Single statement approach
This is the combined statement showing the components of profit or loss and
components of other comprehensive income in a single statement of comprehensive
income.
PAS 1, paragraph 88, provides that an entity shall recognize all items of income and
expense during a period in profit or loss unless a PFRS requires or permits otherwise.
PAS 8 specifies two circumstances, namely the correction of errors and the effect of changes
in accounting policies, which are recognized outside of profit or loss.

PAS 1, paragraph 87, specifically mandates that an entity shall not present any items of
income and expense as extraordinary items, in the income statement of statement of
comprehensive income or in the notes.
PAS 1, paragraph 97, provides that when items of income and expense are material, their
nature and amount shall be disclosed separately.
Paragraph 98, provides the circumstances that would give rise to the separate disclosure or
items of income and expense.
PAS 1, paragraph 82, provides that the line items in the statement of comprehensive
income are:
a. Revenue
b. Gain or loss from derecognition of financial asset measured at amortized cost as
required by PFRS 9
c. Finance cost
d. Share of income or loss of associate and joint venture accounted for using the equity
method
e. Income tax expense
f. A single amount comprising discontinued operations
g. Profit or loss for the period
h. Other comprehensive income
i. Comprehensive income for the period
PAS 1, paragraph 99, provides that an entity shall present on the face of the income
statement an analysis of expense using a classification based on either the function of
expense or their nature within the entity, whichever provides information that is reliable and
more relevant.
PAS 1, paragraph 105, simply states that because each method of presentation has merit
for different types of entities, management is required to select the presentation that is
reliable and more relevant.
CHAPTER 8
PFRS 5, paragraph 6, provides that a noncurrent asset or disposal group is classified as
held for sale if the carrying amount will be recovered principally through a sale transaction
rather than through continuing use.
PFRS 5, paragraph 15, provides that an entity shall measure a noncurrent asset or
disposal group classified as held for sale at the lower of carrying amount or fair value less
cost of disposal.
PFRS 5, paragraph 25, further provides that a noncurrent asset classified as held for sale
shall not be depreciated.
PFRS 5, paragraph 21, provides that an entity shall recognize a gain but not in excess of
any impairment loss previously recognized.
PFRS 5, paragraph 18, provides that when an entity adopts the revaluation model for the
measurement of assets, any assets classified as held for sale should be revalued to fair value
immediately prior to the classification as held for sale.
PFRS 5, paragraph 13, provides that an entity shall not classify as held for sale a
noncurrent asset or disposal group that is to be abandoned.
PFRS 5, paragraph 14, provides that an entity shall not account for a noncurrent asset
that has been temporarily taken out of use as if it had been abandoned.
PFRS 5, paragraph 27, provides that the entity shall measure the noncurrent asset that
ceases to be classified as held for sale at the lower of:

a. Carrying amount before the asset was classified as held for sale adjusted for any
depreciation or amortization that would have been recognized if the asset had not
been classified as held for sale.
b. Recoverable amount at the date of the subsequent decision not to sell.
PFRS 5, paragraph 28, states that any adjustment to the carrying amount of a noncurrent
asset that ceases to be classified as held for sale should be included in profit or loss.
PFRS 5, paragraph 3, provides that assets classified as noncurrent in accordance with PAS
1 shall not be reclassified as current asset until they meet the criteria to be classified as held
for sale.
PFRS 5, paragraph 38, provides that if the noncurrent asset is a disposal group classified
as held for sale, the assets and liabilities of the group shall be presented separately and
cannot be offset as a single amount.
CHAPTER 9
Appendix A of PFRS 5, a discontinued operation defined as a component of an entity that
either has been disposed of or is classified as held for sale and:
a. Represents a separate major line of business or geographical are of operations.
b. Is part of a single co-ordinated plan to dispose of a separate major line of business or
geographical area of operations
c. Is a subsidiary acquired exclusively with a view to resale.
PFRS 5, paragraph 12, prohibits the retroactive classification as a discontinued operation
when the discontinued criteria are met after the end of reporting period.
PFRS 5, paragraph 33, provides that an entity shall disclose a single amount comprising
the total of post-tax profit or loss of the discontinued operation and the post-tax gain or loss
recognized on the measurement to fair value less to cost of disposal or on the disposal of the
assets or disposal group constituting the discontinued operation.
PFRS 5, paragraph 34, provides that if a disposal group is classified as held for sale in the
current year, the results of the disposal group for prior period shall be re-presented as
relating to discontinued operation in the comparative figures for the current years income
statement.
PFRS 5, paragraph 38, provides that an entity shall also present separately on the face of
the statement of financial position the following information:
a. Assets of the component held for sale separately from all other assets
b. Assets of the component held for sale are measured at the lower of fair value less to
cost of disposal and their carrying amount.
c. Liabilities of the component separately from all other liabilities.
d. Nondepreciation noncurrent assets of the component held for sale shall not be
depreciated.
PFRS 5, paragraph 3, provides that the assets of the component shall be presented as a
single amount under current assets and the liabilities of the component shale be presented
as a single amount under current liabilities.
PFRS 5, paragraph 40, further provides that if a disposal group is classified as held for sale
in the current year, an entity shall not reclassify or re-present the assets and liabilities of the
disposal group for the prior period to reflect the held for sale classification in the statement
of financial position as of the end of the current reporting period.
PFRS 5, paragraph 33, provides that the net cash flows attributable to the operating,
investing, and financing activities of a discontinued operation shall be separately presented
in the statement of cash flows or disclosed in the notes.

PFRS 5, paragraph 13, prohibits noncurrent assets that will be abandoned from being
classified as held for sale.
CHAPTER 10
PAS 8 has identified two main categories of accounting changes, namely:
a. Change in accounting estimate
b. Change in accounting policy
PAS 8, paragraph 5, defines a change in accounting estimate as an adjustment of the
carrying amount of an asset or a liability, or the amount of the periodic consumption of an
asset that results from the assessment of the present status and expected future benefit and
obligation associated with the asset and liability.
PAS 16, paragraph 61, provides that the depreciation method shall be reviewed at least
at each financial year-end and if there has been a significant change in the expected pattern
of consumption of the future economic benefit embodied in an asset, the method shall be
changed to reflect the changed pattern and such change shall be accounted for as a change
in accounting estimate.
PAS 8, paragraph 22, provides that an entity shall adjust the opening balance of each
affected component of equity for the earliest prior period presented and the comparative
amounts disclosed for each prior period presented as if the new policy had always been
applied.
PAS 8, paragraph 10, provides that in the absence of an accounting standard that
specifically applies to a transaction or event, management shall use judgment in selecting
and applying an accounting policy that results in information that is relevant to the economic
decision making needs of users and faithfully represented.
Paragraph 11 and 12 specify the following hierarchy of guidance which management may
use when selecting accounting policies in such circumstances:
a. Requirements of current standards dealing with similar matters.
b. Definition, recognition criteria and measurement concepts for assets, liabilities,
income and expenses in the Conceptual Framework for Financial Reporting.
c. Most recent pronouncements of other standard-setting bodies that use a similar
Conceptual Framework, other accounting literature and accepted industry practices.
PAS 34, prescribes the minimum content of an interim financial report and the principles for
recognition and measurement in complete or condensed financial statements for an interim
period.
PAS 34, does not mandate which entities are required to publish interim financial reports,
how frequently, or how soon after the end of an interim period.
PAS 34, on interim financial reporting does not mention about the two views. Essentially,
the standard adopts a mix of the integral and independent views.
PAS 34, paragraph 8, provides that an interim financial reports shall include, at a
minimum, the following components:
a. Condensed statement of financial position
b. Condensed statement of comprehensive income
c. Condensed statement of changes in equity
d. Condensed statement of cash flows
e. Selected explanatory notes
PAS 8A provides that an entity can present items of profit or loss in a separate condensed
income statement.
PAS 34, allows an entity to publish a set of condensed financial statement or complete set
of financial statements in its interim financial report.

PAS 34, paragraph 19, provides that if an entitys interim financial report is in compliance
with Philippine Financial Reporting Standards, such fact shall be disclosed.
PAS 34, assumes that financial statement users have an access to the entitys most recent
annual report.
PAS 34, paragraph 28, provides that an entity shall apply the same accounting policies in
the interim financial statements as are applied in the annual financial statements.
PAS 34, paragraph 21, provides that if the business is seasonal, in addition to the current
interim period financial statements, the entity is encouraged to disclose financial
information:
a. For at least 12 months
b. Comparative information for the prior comparable 12-month period
Paragraph 25 of Appendix B of PAS 34, provides that inventories are measured for
interim financial reporting by the same principles as at financial year-end.
PAS 34, paragraph 17, requires disclosure of the writedown of inventories to net realizable
value and the reversal of such writedown in a later interim period.
PAS 12 of Appendix B of PAS 34, states that the interim period income tax expense if
accrued using the annual effective income tax rate applied to the pretax income of the
interim period.
PAS 17 of Appendix B of PAS 34, states that the income tax expense for interim periods
of that financial year is measured using separate effective tax rates for each of the tax years
applied to the portion of pretax income earned in each of those tax years.
CHAPTER 11
PFRS 8, now sets out the requirement for disclose of information about operating segments.
PFRS 8 shall apply to the separate or individual financial statements of an entity, and to the
consolidated financial statement of a group with a parent:
a. Whose debt or equity instruments are traded in a public market
b. That files or is in the process of filing the consolidated financial statements with a
securities commission or other regulatory organization for the purpose of issuing any
class of instruments in a public market.
PFRS 8 has abandoned the risks and rewards approach of identifying operations by
business segments and geographical segments.
PFRS 8 simply states that the amount of segment revenue and segment expense shall be
the measure reported to the chief operating decision maker.
PFRS 8, paragraph 24, provided that segment assets such as deferred tax assets,
postemployment benefit assets, financial instruments, and rights arising under insurance
contracts are not required to be disclosed.
CHAPTER 16
PAS 7, paragraph 7, provides that an investment normally qualifies as a cash equivalent
only when it has a short maturity of three months or less from date of acquisition.
PAS 7, paragraph 15, provides that a cash flows arising from the purchase and sale of
dealing or trading securities are classified as operating activities.
PAS 7, paragraph 43, provide that investing and financing transactions that do not require
use of cash or cash equivalents shall be excluded from the statement of cash flows.
PAS 7, paragraph 33, provides that interest paid and interest received shall be classified
as operating cash flows because they enter into the determination of net income or loss.
PAS 7, paragraph 33, provides that dividend received shall be classified as operating cash
flow because it enters into the determination of net income.

PAS 7, paragraph 34, provides that dividend paid shall be classified as financing cash flow
because it is a cost of obtaining financial resources.
PAS 7, paragraph 35, provides that cash flows arising from income taxes shall be
separately disclosed as cash flows from operating activities unless they can be specifically
identified with investing and financing activities.
PAS 7, paragraph 18, provides that an entity shall report cash flows from operating
activities using either the direct method or indirect method.
PAS 7, paragraph 32, provides that interest paid is disclosed separately whether it has
been recognized in profit or loss or capitalized.
Paragraph 35, provides that income tax paid is also disclosed or presented separately.
PAS 7, paragraph 19, provides that entities are encouraged to report cash flows from
operating activities using the direct method.
PAS 7, paragraph 21, provides that an entity shall report separately major classes of gross
cash receipts and gross cash payments arising from investing and financing activities using
the direct method.