Cash First on the list among the current asset shown in the Consolidated Balance Sheet of Pancake House,

Inc. and Subsidiaries is the single caption, cash. This caption does not have any disclosures to notes to financial statements. The company also shown the amount of cash during 2008. Compared to last years cash the company has generated more cash. The presentation of this item is the same in last year s Statement of Financial Position.

In accounting parlance, cash includes money and other negotiable instrument that is payable in instrument that is payable in money and acceptable by the bank for deposit and immediate credit. That is why instead of showing single caption, cash; the line item, cash and cash equivalents must be used. And under this line item are the details comprising it that should be disclosed in the notes to financial statements. The companys financial statement should have shown the composition of its cash, like how much of the whole cash of the company is on hand and on bank. If there is cash on bank, the name of the bank where it is entrusted must also be indicated, of course this amount should not be restricted for it to be qualified as cash. Cash fund set aside for use in current operation or for the payment of current obligation such as petty cash fund, payroll fund, and travel fund must also be shown. Regarding the foreign transactions of the company, as stated in note 2 of companys notes to financial position, the functional currency of the entities of the Group is the PhP except for PHII which the functional currency is the United States dollar ($). Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the

transaction and are translated into PhP at the rate of exchange ruling at the balance sheet date and income and expenses are translated to PhP at monthly average exchange rates.

Prepaid Expenses and Other Current Assets Last item on companys Consolidated Balance Sheet is the caption Prepaid Expenses and Other Current Assets. Last year, the companys Balance Sheet, only showed the caption Other Current Assets. However, the composition of this line item, compared to current balance sheet, is the same; prepayments, advances to suppliers, creditable withholding taxes and others, disclosed to notes to financial statement. The company should have separately showed prepaid expenses from other current assets for the two are different from each other. Also, advances to suppliers, which represent advances payments on goods to be purchased or services to be incurred in connection with the Groups operations, which is normally within twelve months or within the normal operating cycle, were charged as an expense. As the class have studied, advances to supplier are considered as nontrade receivable. Therefore, the company should have included this item, advances to supplier, under the companys trade and other receivables.

Property and Equipment Instead of the usual caption, Property, Plant and Equipment, the line item, Property and Equipment was used.

The initial cost of property and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. When each major inspection is performed, its cost is recognized in the carrying amount of the item of property and equipment as a replacement if the recognition criteria are satisfied. The critics find this method of initial recognition for assets appropriate and in accordance with proper recognition of property, plant and equipment. Regarding the subsequent recognition of these assets, the management uses cost model. Because of this, the critics encourage the management to disclose the fair values of each of the noncurrent assets of the company that qualifies as property and equipment when these are materially different from the carrying amount. Depreciation is computed using the straight-line method. The critics find this method easier to use in this kind of business. However, the critics suggest the management to check if isnt the function of use of these assets more appropriate to consider rather than the passage of time. If it is, therefore, variable charge method should be used for its depreciation, specifically working hours method. The management retain fully depreciated items as property and equipment until these are no longer in use, therefore the critics also encourage the management to disclose the gross carrying amount of these assets. If the company has temporarily idle as well as retired property and equipment and then classified as held for sale, the critics encourage the disclosures of these assets. Lastly, it is not clearly stated if the Construction in Progress included in Property and equipment is to be used for capital appreciation or for other use. If the said

construction in progress is to be used for capital appreciation, it must be an investment property based on PAS 40 but if not, it will be an owner-occupied property. Compared to last years (2008) Consolidated Balance Sheet of this company, current years balance sheet presentation of this item is the same. The amount of property and equipment decreased even if the cost or the balance of this asset increased. This is because of the accumulated depreciation and amortization increased also.