VINSMOKE COMPUTER REPAIR

SHOP

FINANCIAL
STATEMENTS

Eunice B. Soriano, CPA

Accountant
 STATEMENT OF MANAGEMENT’S RESPONSIBILITY

FOR THE FINANCIAL STATEMENTS

The Management of Vinsmoke Computer Repair Shop is responsible for all information and
representations contained in the Financial Statements for the year ended December 31, 2020.
Management is likewise responsible for all the information and representations contained in the
Financial Statements accompanying in the Annual Income Tax Return covering the same
reporting period. Furthermore, the Management is responsible for all information and
representations contained in all other tax returns field for the reporting period, including but not
limited to the value added tax and/or percentage tax returns, withholding tax return, documentary
stamp tax returns and/or other tax returns.

In this regard, the management affirms that the attached financial statement for the year then
ended December 31, 2020, and the accompanying Annual Income Tax Return are in accordance
with the books and records of Vinsmoke Computer Repair Shop, complete and correct in all
material respect. Management likewise affirms that:

The Annual Income Tax Return has been prepared in accordance with the provisions of the Tax
Reform for Acceleration and Inclusion Law, as amended and pertinent tax regulations and other
issuances of the Department of Finance and the Bureau of Internal Revenue;

Any disparity of figures in the submitted reports arising from the preparation of financial
statements pursuant to financial accounting standards and the preparation of the income tax
return pursuant to tax accounting rules has been reported as reconciling items and maintained in
the company books and records in accordance with the requirements of Revenue Regulation No.
6 - 2007 and other revenue issuances.

Vinsmoke Computer Repair Shop has filled all applicable tax returns, reports and statements
required to be filed under Philippine Tax Laws for the reporting period, and all taxes and other
impositions shown there on to be due and payable have been paid for the reporting period,
excepts those contested in good faith.

DAVE FRANCIS R. REVILLA

Owner

Vinsmoke Computer Repair Shop

NOTES TO FINANCIAL STATEMENTS
December 31, 2020

Note 1- Business Information

Vinsmoke Computer Repair Shop was organized as a sole-proprietorship in accordance with the
laws of the Rebublic of the Philippines on December 26, 2019 with the Bureau of Internal
Revenue (BIR) Registration No. 4CR0000020699 and DTI Registration No. 113099. The entity is
engaged in the sale of computer parts as well as providing repairs service.

The registered office address and place of business is Maligaya St. Mapandan Pangasinan.

The accompanying financial statements as of December 31, 2020 were authorized for issue by
the Proprietor/Manager on January 6, 202. The management is accredited to make revisions
even after the date of issue.

Notes 2-Summary of significant Accounting Principles

The principal accounting policies applied in the preparation of these financial statements are set
out below. These policies have been consistently applied to the years presented unless otherwise
stated.

Basis of Financial Statements Preparation

The accompanying financial statements of Vinskoke Computer Repair Shop as of and for the
years ended December 31, 2020 have been prepared by applying accounting policies in
accordance with the Philippine Financial Reporting Standards (PFRS). PFRS are issued by the
Financial Reporting Standards Council (FRSC) and approved by the Philippine Board of
Accountancy (BOA) based on International Financial Reporting Standards issued by the
International Accounting Standards Board (IASB).

The financial statements have been prepared using the measurement bases specified by PFRS
for each type of asset, liability, income and expense. The measurement bases are more fully
described in the accounting policies that follow.

Accounting policies adopted

In deciding whether a particular accounting policy shall be disclosed, management considers
whether disclosure will assist users in understanding how transactions, other events and
conditions are reflected in the reported financial performance and financial position.
Accounting policies shall be disclosed for all material components.

The following sections that have been published by the International Accounting Standards
Board (IASB) and adopted by the FRSC which became effective for accounting periods
beginning on or after January 1, 2010 were adopted by the entity:

Section 3 - Financial Statement Presentation

Section 4 - Statement of Financial Position
Section 5 - Statement of Comprehensive Income and Income Statement
Section 6 - Statement of Changes in Equity
Section 7 - Statement of Cash Flows
Section 8 - Notes to the Financial Statements
Section 10 - Accounting Policies, Estimates and Errors
Section 13 - Inventories
Section 17 - Property and Equipment
Section 22 - Liabilities and Equity
Section 23 - Revenue
Section 27 - Impairment of Assets
Section 28 - Employee Benefits
Section 29 - Income Tax
Section 32 - Events after the End of the Reporting Period

The adoption of the above sections, upon which the entity has opted to adopt early, did not have any
significant effect on the entity’s financial statements. These, however, require additional disclosures on
the entity’s financial statements.

Section 3, “Financial Statement Presentation”,The amendments clarify guidance on materiality and

aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of
accounting policies.

Section 4, “Statement of Financial Position”, the statement of financial position (sometimes called the
balance sheet) presents an entity’s assets, liabilities and equity as of a specific date—the end of the
reporting period and provides the minimum line items that should be included in the statement of
financial position. However, additional line items, heading and subtotals shall be presented if they will be
relevant to an understanding of the entity's financial position.

Section 5, “Statement of Comprehensive Income and Income Statement” requires an entity to present its
total comprehensive income for a period—i.e. its financial performance for the period—in one or two
financial statements. It sets out the information that is to be presented in those statements and how to
present it.

Section 6, “Statement of Changes in Equity”, sets out requirements for presenting the changes in an
entity’s equity for a period, either in a statement of changes in equity or, if specified conditions are met
and an entity chooses, in an income statement.
Section 7, “Statement of Cash Flows”, the statement of cash flows provides information about the
changes in cash and cash equivalents of an entity for a reporting period, showing separately changes from
operating activities, investing activities and financing activities.

Section 8, “Notes to the Financial Statements”, notes provide narrative descriptions or disaggregation of
items presented in those statements and information about items that do not qualify for recognition in
those statements. In addition to the requirements of this section, nearly every other section of this PFRS
requires disclosures that are normally presented in the notes.

Section 10, “Accounting Policies, Estimates and Errors”, provides guidance for selecting and applying the
accounting policies used in preparing financial statements. It also covers changes in accounting estimates
and corrections of errors in prior period financial statements.

Section 11, “Basic Financial Instruments”, PFRS 9 an entity to classify finacial assets as subsequently
measured at either amortized cost or fair value on the basis of both the entity’s business model for
managing the financial assets and the contractual cash flow characteristics of the financial asset.

Section 13, “Inventories”, these items are measured at the lower of cost and net realizable value. Cost is
calculated using the weighted average method. Inventories are recognized as expense when deployed for
utilization or consumption inthe ordinary course of operations of the Corporation.

Section 17, “Property and Equipment”, The property and equipment are stated at cost less accumulated
depreciation. Only additional expenses that will enhance usefulness of assets are capitalized and
amortized over the remaining life of the asset, otherwise these are charged to operations.Depreciation is
computed on a straight-line method based on the estimated useful lives of the asset

Section 22, “Liabilities and Equity”, establishes principles for classifying financial instruments as either
liabilities or equity and addresses accounting for equity instruments issued to individuals or other parties
acting in their capacity as investors in equity instruments (i.e. in their capacity as owners).

Section 23, “Revenue”, prescribes the accounting treatment of revenue arising from certain types of
transactions and events. The primary issue in accounting for revenue is determining when to recognize
revenue.

Section 27, “Impairment of Assets”, the business recognizes impairment loss for any initial or
subsequent write-down of the asset to fair value less cost to sell. Gain on any subsequent increase in fair
value less costs to sell of an asset is recognized to the extent of the cumulative impairment loss thathas
been recognized

Section 28, “Employee Benefits”, deals with accounting and reporting by the plan to all participants as a
group. An entity shall recognize the cost of all employee benefits to which its employees have become
entitled as a result of service rendered to the entity during the reporting period: (a) as a liability (b) as an
expense.

Section 32, “Events after the End of the Reporting Period”, defines events after the end of the reporting
period and sets out principles for recognizing, measuring and disclosing those events. Events after the end
of the reporting period are those events, favorable and unfavorable, that occur between the end of the
reporting period and the date when the financial statements are authorized for issue.
Note 3 - Management’s significant accounting judgments and estimates

Judgments
In the process of applying the entity’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect on amounts
recognized in the financial statements:

Determining functional currency

Based in economic substance of underlying circumstances relevant to the entity, the functional currency
has been determined to be the Philippine peso, which is the currency of the primary economic
environment in which the entity operates and is the currency that mainly influences the prices of the
products and services and the cost of providing such products and services.

Repairs and maintenance

Repairs and maintenance incurred by the entity have not resulted in an increase in the future economic
benefit of its property and equipment, therefore charged to operations.

Estimates
In the application of the entity’s accounting policies, management is required to make judgments,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical experience
and other factors that are considered to be relevant. Actual results may differ from these estimates.

The following represents a summary of the significant estimates and judgments and related impact and
associated risks in the entity’s financial statements:

Estimated allowance for doubtful accounts

An allowance for doubtful accounts, if any, shall be maintained at a level considered adequate to provide
for potential uncollectible receivables. The level of this allowance is evaluated by management on the
basis of factors that affect the collectability of the accounts. These factors include, but are not limited to,
the length of the entity’s relationship with the customer, the customer’s payment behavior and known
market factors. The entity reviews the age and status of receivables, and identifies accounts that are to be
provided with allowances on a continuous basis.

The amount and timing of recorded expenses for any period would differ if the entity made different
judgments or utilized different estimates. An increase in allowance for doubtful accounts would increase
the recorded operating expenses and decrease current assets.

Evaluation of asset impairment

The entity assesses the impairment of assets whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. The factors that the entity considers important
which could trigger an impairment review include significant changes in asset usage, significant decline
in assets’ market value and obsolescence or physical damage of an asset. If such indications are present
and where the carrying amount of the asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.

The recoverable amount is the higher of an asset’s net selling price and value in use. The net selling price
is the amount obtainable from the sale of an asset in an arm’s length transaction while value in use is the
present value of estimated future cash flows expected to arise from the continuing use of an asset and
from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or,
if it is not possible, for the cash-generating unit to which the asset belongs.

In determining the present value of estimated future cash flows expected to be generated from the
continued use of the assets, the entity is required to make estimates and assumptions that may affect
property and equipment.

Estimating useful lives of property and equipment

The entity estimates the useful lives of its property and equipment based on a period over which the assets
are expected to be available for use.

Financial assets and liabilities

The entity requires certain financial assets and liabilities to be at fair value, which requires use of
extensive accounting estimates and judgments. While significant components of fair value measurement
were determined using verifiable objective evidence (i.e. interest and volatility rates), the amount of
changes in fair value would differ if the entity utilized different valuation methodologies. Any changes in
fair value of these financial assets and liabilities would affect directly the income statement and equity, as
appropriate.

Revenue recognition
The entity’s revenue recognition policies require the use of estimates and assumptions that may affect the
reported amounts of revenues and receivables. Differences between the amounts initially recognized and
actual settlements are taken up in the accounts upon reconciliation. However, there is no assurance that
such use of estimates may not result to material adjustments in future periods.