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PAS 7 and PAS 10 Presentation

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7 views

PAS 7 and PAS 10 Presentation

Uploaded by

caryljaneespiritu1110
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CONCEPTUAL FRAMEWORK AND ACCOUNTING STANDARDS

APRIL 6, 2024

PHILIPPINE
ACCOUNTING
STANDARDS (PAS)
7
10
OVERVIEW: PAS
7 10 12
STATEMENT OF EVENTS AFTER
INCOME TAXES
CASH FLOWS PERIOD

16 19 20
EMPLOYEE
PPE GOVT GRANTS
BENEFITS
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


includes the requirements for the presentation of the statement of cash flows (SCF)
SCF includes information on the sources and utilization of cash and cash equivalents
during the period.

CASH - cash on hand and cash in bank

CASH EQUIVALENTS
“short term highly liquid investments that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value”
debt instruments acquired within 3 months or less
Examples:
a. 1-year treasury bill acquired 3 months before maturity date
b. 90-day money market instrument or commercial paper
c. 3-month time deposit
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


CASH FLOWS - composed of inflows (sources) and outflows (uses) of cash and cash
equivalents

USES OF SCF
It helps users of the SCF to assess the firm’s:
ability to generate cash and cash equivalents
timing and certainty of the cash flow generation
the need of the entity to utilize those cash flows

SCF also helps to assess the quality of earnings of an entity. Companies may report
profits but are not actually generating cash for operational use.
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


CLASSIFICATIONS OF CASH FLOWS:

1. Operating activities
2. Investing activities
3. Financing activities
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


OPERATING ACTIVITIES:

derived from principal revenue-producing activities


usually include income/expense
Examples
- income from the sale of goods
- cash payments for purchases of raw materials
- cash payments for employee benefits
- cash receipts from trade activities
- cash receipts from buying/selling held for trading securities
- cash flows from the purchase/rent/subsequent sales of assets previously rented out
- loan transactions of banks
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


INVESTING ACTIVITIES:
involves the acquisition/disposal of non-current assets and other investments.
Examples:
- PPE related cash flows
- purchase/sale of equity or debt instruments (not classified as cash equivalent or held
for trading)
- purchase/sale of derivative assets and liabilities (not classified as cash equivalent or
held for trading)
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


FINANCING ACTIVITIES:
those affecting the entity’s capital and borrowing structure
SHE related
Bank loans related (from non-bank institutions)
Examples:
- cash flows from share issuances
- cash flows from bonds, notes, mortgage payables, short or long-term borrowing
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


KEY TAKEAWAYS:

OPERATING - affects profit and loss


INVESTING - affect non-current assets and other investments
FINANCING - affect borrowings and equity

GENERAL REMINDERS:
include only the transactions that affect cash/cash equivalents
exclude transactions that do not affect the cash/cash equivalents account
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


METHODS:

1. Direct Method
2. Indirect Method
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


DIRECT METHOD:

Shows each major class of gross


cash receipts and gross cash
payments
PHILIPPINE ACCOUNTING STANDARDS (PAS)

7 - STATEMENT OF CASH FLOWS


INDIRECT METHOD:

profit or loss is adjusted for the


effects of non-cash items and
changes in operating assets and
liabilities.
PHILIPPINE ACCOUNTING STANDARDS (PAS)

10 - EVENTS AFTER THE REPORTING PERIOD


This covers all events taking place after the end of the accounting
period until the financial statements are authorized to be issued.

Example:
End of period (calendar) - December 31, 2023
Authorized by the BOD for issuance - BOD meeting is on April 8,
2024
Events after reporting period covers January 1, 2024 until April 8,
2024
PHILIPPINE ACCOUNTING STANDARDS (PAS)

10 - EVENTS AFTER THE REPORTING PERIOD


Adjusting events after the reporting period >>> events with
evidence of conditions that existed at the end of the accounting
period. In the previous example, those existing as of December 31,
2023.

Non-adjusting events after the reporting period >>> events that


are indicative of conditions that arose after the reporting period
or after December 31, 2023 (based on previous example).
PHILIPPINE ACCOUNTING STANDARDS (PAS)

10 - EVENTS AFTER THE REPORTING PERIOD


Examples of ADJUSTING events:
1. after-period settlement of a court case that shows the entity has
an obligation at the end of the reporting period.
2. confirming after the reporting period that an asset is impaired at
the end of the period.
3. Discovery of fraud or significant errors after the end of the
reporting period.
PHILIPPINE ACCOUNTING STANDARDS (PAS)

10 - EVENTS AFTER THE REPORTING PERIOD


NON-ADJUSTING events (arising after the period) are not required to
be revised quantitatively but need to be disclosed in the audited
financial statements.
PHILIPPINE ACCOUNTING STANDARDS (PAS)

10 - EVENTS AFTER THE REPORTING PERIOD


Note:

Dividends declared after the reporting period are not recognized as


liability at the end of the reporting period because no present
obligation exists at the end of the period.

PAS 10 prohibits the preparation of FS on a going concern basis if the


management determines after the reporting period that it intends to
liquidate the entity or to cease trading or that it has no realistic
alternative but to do so.

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