Investment in Associates

(PAS 28 - Investments in Associates and Join Ventures & PFRS 12 - Disclosure of Interests in Other Entities)
Definition and Nature of the Account
Investment in Associates is an investment wherein the entity has significant influence over the investee.
Significant influence is presumed when the entity holds directly or indirectly 20% or more of the voting power.
Investment in Associates is a Noncurrent Asset.
Scope in
When Significant influence is present in cases such as:
a. owning 20% to 50% of ownership interest (presumption); or
b. when owning less than 20% but presence of Significant Influence exists through: representation in BOD,
participation in the policy-making decisions processes of the investee, material transactions with the investee,
interchange of managerial personnel, or provision of technical information
Scope out
Absence of Significant Influence or presence of control or joint control in cases such as:
a. investment measured at fair value, investment in subsidiaries, investment in joint ventures
b. Investment classified as held-for-trading
c. Investment acquired with the intent of disposal near term
d. Preference shares are held since this does not give the investor voting rights
Initial Measurement
Investment in associates is accounted for using the equity method. The initial measurement of the investment
under the equity method is recognized at cost plus direct transaction costs incurred by the investor in order to acquire
the investment.
Subsequent Measurement
After the initial recognition, there is subsequent adjustment for the investor's share in the changes in equity. the
carrying amount of the investment is increased by the investor's share of the associate's profits and decreased by its
share of losses. Any dividends received from the associate will reduce the carrying amount of the investment.
Adjustment is made on the entity's share in the investee's profit or loss to account for the depreciation or amortization
of any undervaluation or overvaluation in the investee's identifiable assets and liabilities on a rational basis. An entity
stops applying the equity method from the date it loses significant influence over the investee.
Presentation
The following are the presentations under PAS 28 in regards to Investment in Associates:
a. Equity method investments must be classified as non-current assets.
b. The investor's share of the profit or loss of equity method investments, and the carrying amount of those
investments, must be separately disclosed.
c. The investor's share of any discontinuing operations of such associates is also separately disclosed. The investor's
share of changes recognized directly in the associate's other comprehensive income are also recognized in other
comprehensive income by the investor, with disclosure in the statement of changes in equity as required by PAS
1 Presentation of Financial Statements.
Disclosures
There are no disclosures specified in PAS 28. Instead, PFRS 12 Disclosure of Interests in Other Entities outlines the
disclosures required for entities with joint control of, or significant influence over, an investee.
 Investment Property
(PAS 40 – Investment Property)
Definition and Nature of the Account
Investment Property is a land and/or building held to earn rentals or for capital appreciation or both. It is a
Noncurrent Asset.
Scope in
This standard shall be applied to land and building held to earn rentals or capital appreciation (or both);
a. land held for long-term capital appreciation
b. land held for a currently undetermined future use
c. building leased out under an operating lease
d. vacant building held to be leased out under an operating lease
e. property that is being constructed or developed for future use as investment property
Scope out
This standard does not apply to:
a. owner occupied property;
b. property that is leased out to other entity under a finance lease;
c. assets held for sale in the ordinary course of business; and
d. assets classified as "held for sale”
Initial Measurement
An investment property is measured initially at cost. The measurement of cost depends on the mode of
acquisition.
a. Acquisition by Purchase
- purchase price and any directly attributable costs incurred in bringing the asset to its intended condition.
b. Self-Constructed
- the asset is measured at cost which includes all directly attributable costs of constructing and preparing for its
intended use but excludes abnormal amount of wasted resources
- Cost of Materials + Labor + Construction Overhead
c. Exchange of Assets
1. With commercial substance – order of priority:
- Fair Value of the Asset Given Up 土 cash paid/received
- Fair Value of the Asset Received
- Carrying Amount of the Asset Given Up 土 cash paid/received

2. Without commercial substance

- Carrying Amount Asset Given Up 土 cash paid/received
Subsequent Measurement
When it comes to subsequent measurement, the entity can apply its accounting policy to all of its investment
properties, using either the Cost Model or the Fair Value Model. Regardless of the accounting policy employed, the entity
has to determine the fair value of its investment property in accordance with PAS 40.
Presentation
A property that is leased by a member of a group to another member (parent or subsidiary) does not qualify as
investment property in the consolidated financial statements because, from the group's perspective, the property is
owner-occupied. However, the property is classified as investment property in the lessor/owner's individual financial
statements.
Disclosures
General Disclosures:
a. If measured using the fair value model or the cost model
b. When classification is difficult, the criteria used to distinguish investment property from PPE and inventory.
c. Rental income and any related expenses.
d. The existence and amounts of restrictions on investment property.
e. Contractual obligations to purchase, construct or develop investment property or for repairs, maintenance or
enhancements.
 FINANCIAL STATEMENT PRESENTATION
sourced from Ayala Land Incorporation

DISCLOSURE
a. INVESTMENT IN ASSOCIATES b. INVESTMENT PROPERTY
BSA 2G - GROUP 2 (INVESTMENTS-PFRS 9, GOVERNMENT GRANTS)
1. Alfonso, Alexa
2. Bondoc, Shamille Anne
3. Cabiling, Juliana
4. Hernandez, Mica Arabella
5. Jimenez, Judeah
6. Panganiban, Jr. Agustin
7. Patiam Angelyne
8. Ramos, Roselyn

INVESTMENT
DEFINITION OR NATURE OF THE ACCOUNT
o A financial asset recognized in an entity's statement of financial position upon becoming a party to the contractual provisions
of the instrument is referred to as an investment under IFRS 9. The classification and measurement of financial assets, liabilities,
and certain contracts for the purchase or sale of non-financial objects are outlined in IFRS 9.

SCOPE IN
Included in measuring Investments are the following:
o Financial asset:
a. Cash and cash equivalents (e.g., cash on hand, in banks, short-term money placements, and cash fund).
b. Receivables such as accounts, notes, loans, and finance lease receivables.
c. Investments in equity or debt of other entities such as held for trading securities, investments in subsidiaries, associates,
joint ventures, investments in bonds, and derivative assets.
d. Sinking fund and other long-term funds composed of cash and other financial assets.

o Financial Liabilities:
a. Payable such as accounts, notes, loans and payables.
b. Lease liabilities
c. Held for trading liabilities and derivative liabilities.
d. Redeemable preference shares issued.
e. Security deposits and other returnable deposits.

SCOPE OUT
o Not part of financial asset:
a. Physical assets, such as inventories, biological assets, PPE and investment property.
b. Intangible assets
c. Prepaid expenses and advances to suppliers.

o Not part of financial liabilities:

a. Unearned revenues and warranty obligations that are to be settled by future delivery of goods or provisions of services.
b. Constructive obligations.

o Receivables, payables, and similar items arising from statutory requirements or those imposed by the government are not
financial instruments because these items do not arise from contracts.
o The following are not financial assets or liabilities:
a. Prepaid taxes or claims for tax refund/current tax payables
b. Deferred tax assets/liabilities.
c. SSS, Philhealth, Pag-IBIG payables.

INITIAL MEASUREMENT
o The initial measurement of financial assets is the recognition of fair value plus transaction costs, which are expenses directly
tied to acquiring the asset. This ensures the recorded value reflects both the market price and related costs. However, financial
 assets classified as Fair Value Through Profit or Loss (FVPL) are treated differently. For FVPL assets, the initial
measurement only includes fair value, while transaction costs are immediately recognized as expenses.
o Fair value typically matches the transaction price, the agreed-upon amount at acquisition. Transaction costs, such as agent
fees, broker commissions, regulatory charges, and transfer taxes, are included in the initial measurement, while items like
debt premiums, financing costs, and internal administrative expenses are excluded.

SUBSEQUENT MEASUREMENT:
o After initial recognition, financial assets are measured at
a. Amortization cost;
b. Fair value through other comprehensive income (FVOCI); or
c. Fair value through profit or loss (FVPL)

FVPL
o Gain and losses on financial assets measured at FVPL are recognized in profit or loss.

FVOCI - mandatory
o Financial asset gains and losses measured at FVOCI are recognized in other comprehensive income until derecognized or
reclassified. When derecognized, the cumulative gain or loss is reclassified from equity to profit or loss.

FVOCI - election
o Investment gains and losses in equity securities measured at FVOCI are recognized in other comprehensive income. When
derecognized, gains or losses are transferred within equity, not to profit or loss. Dividends are recognized in profit or loss.

Amortized cost
o Financial assets' gains or losses, resulting from derecognition, reclassification, amortization, or impairment, are recognized as
profit or loss, while fair value changes are not.

PRESENTATION:
o As per the provisions of the PFRS 9, the financial instruments are classified and presented based on the following criteria. They
are grouped and presented in the statement of financial position either at amortized cost, fair value through profit or loss (FVPL)
or fair value through other comprehensive income (FVOCI). Non-financial assets and liabilities measured at amortized cost are
presented as carrying amounts while the ones measured at FVPL or FVOCI are presented at fair value. In the statement of
profit and loss, gains or losses from the financial instruments at FVPL are included in income or expenses while for FVOCI,
changes in fair value are presented in other comprehensive income. Interest income and impairment losses are measured and
presented separately, subject to the classification of the financial instrument and the dividends.

DISCLOSURE:
a. Judgment and estimates used for the determination of the initial measurement of financial instruments and for the allocation of
gains and losses
b. The nature and valuation of financial assets and liabilities, as well as classification criteria of the Company’s balances
c. The nature and the extent of risks from financial instruments and products, including credit risk, liquidity risk and the market
risk, including analysis based on sensitivity and risk management.
d. The fair value hierarchy and the different approaches to measuring fair value for instruments classified in this category
e. Information on the reclassifications, changes and reversals, and other impairment losses for the reporting period.

SNIP OF THE MEASUREMENT, PRESENTATION, AND DISCLOSURE OF THE ACCOUNT IN AN AUDITED FS

MEASUREMENTS

PRESENTATION DISCLOSURE
 GOVERNMENT GRANTS
DEFINITION OR NATURE OF THE ACCOUNT
o Government Grants (also referred to as subsidies, subventions, or premiums) are assistance received from the government in
the form of transfers of resources in exchange for compliance with certain conditions. The nature of this account is contingent
on the type of account and its intended use.

SCOPE IN
o Included in the Government grants account are the following:
a. Receipt of cash, land, or other non-cash assets from the government subject to compliance with certain conditions.
b. Receipt of financial aid in case of loss of calamity.
c. Forgiveness of an existing loan from the government
d. Benefit of a government loan with below-market rate of interest
o Additionally, Government assistance that meets the asset recognition criteria are included in the government grants account.

SCOPE OUT

o PAS 20 prescribes the accounting and disclosure of government grants and government assistance. PAS 20 does not apply to:
a. Accounting for government grants under hyperinflationary economies;
b. Tax benefits such as income tax holidays, investment tax credits, accelerated depreciation allowances and reduced income
tax rates;
c. Government participation in the ownership of the entity; and
d. Government grants covered by PAS 41 Agriculture.

o Included as government assistance and not as government grants:

a. Tax Benefits;
b. Free technical or marketing advice;
c. Provision of guarantees; and
d. Government procurement policy that is responsible for a portion of the entity’s sales

INITIAL MEASUREMENT:
o Government Grants can be measured initially by two classifications:
a. Monetary Grants: through the amount of cash received or fair value of amount receivable.
b. Non-monetary Grants: through fair value of the non-monetary asset received (land, and other resources) or alternatively
at nominal amount.

o In addition, Government Grants may also be in the form of loan:

a. Forgivable loan: measured at the carrying amount of the loan forgiven.
b. Loan at below-market rate of interest or zero interest: measured as the difference between the initial carrying amount
of the loan determined in accordance with PFRS 9.

Subsequent Measurement
o Government grants shall be recognized in profit or loss on a systematic basis over the periods in which the entity recognizes as
expenses the related costs for which the grants are intended to compensate. (PAS 20.12)
o There are two broad approaches to the accounting for government grants: the capital approach, under which a grant is
recognized outside profit or loss, and the income approach, under which a grant is recognized in profit or loss over one or
more periods.
o It is fundamental to the income approach that government grants should be recognized in profit or loss on a systematic basis
over the periods in which the entity recognizes, as expenses, the related costs for which the grant is intended to compensate.
Therefore:
● Grants in recognition of specific expenses are recognized in profit or loss in the same period as the relevant expenses.
● Grants related to depreciable assets are usually recognized in profit or loss over the periods and in the proportions in which
depreciation expense on those assets is recognized.
 ● Grants related to non-depreciable assets may also require the fulfilment of certain obligations and would then be recognized in
profit or loss over the periods that bear the cost of meeting the obligations.

o Recognizing government grants in profit or loss on a receipt basis (e.g.,) is prohibited as it violates the accrual basis of
accounting. A receipt basis would only be acceptable if there is no allocation basis other than the one in which the government
grant was received.

PRESENTATION:
1. Government grant related to asset is presented as follows:
o Statement of financial position:
a. The grant is presented as a deferred income (liability). (Gross presentation)
b. The grant is deducted from the carrying amount of the related asset. (Net Presentation)
o Statement of comprehensive income (profit or loss section)
a. The income from the grant is reported separately or included in 'Other income.' (Gross presentation)
b. The income from the grant is reported separately or included in 'Other income.' (Net Presentation)
2. Government grant related to income is presented as follows:
o Statement of comprehensive income (profit or loss section)
a. The income from the grant is reported separately or included in 'Other income.' (Gross presentation)
b. The income from the grant is deducted from the related expense. (Net Presentation)

DISCLOSURE:
a. Accounting policy and method of presentation
b. Nature and extent of government grants and other forms of government assistance from which the entity has directly benefited
c. Unfulfilled conditions and contingencies attached to the government grants

SNIP OF THE MEASUREMENT, PRESENTATION, AND DISCLOSURE OF THE ACCOUNT IN AN AUDITED FS

REFERENCES:
o https://www.pagibigfund.gov.ph/document/pdf/transparency/2021/FS/Audited%20Financial%20Statement%20as%20of%20
December%202021%20(with%20posting%20clearance%20from%20COA,%2030%20June%202022).pdf
o https://www.coa.gov.ph/reports/annual-audit-reports/aar-government-owned-and-or-controlled-
corporations/?fbclid=IwZXh0bgNhZW0CMTEAAR0eJgevlQY8xhz3BuGv74ZUhmCMNzdFNaBCIu2wQTt2vjS0GAtKK
WmHnFQ_aem_3j1KUDRqJ8hxg6HWY8_8Nw#199-3571-small-business-guarantee-and-finance-corporation-sb-
corporation-1630457834
 PROPERTY, PLANT, AND EQUIPMENT

Definition/Nature of Account
❖ Property, Plant, and Equipment are tangible assets that are used in business either in
the production or supply of goods or services, for rental, or for administrative purposes.
These assets are also long-term in nature.

Scope In
❖ According to PAS 16, the scope of Property, Plant, and Equipment (PPE) includes
tangible assets held for use in production, supply of goods or services, rental to others,
or administrative purposes, and are expected to be used over more than one period.
PPE also covers bearer plants.

Scope Out
❖ PAS 16 applies to all items of PPE except to the following:
a. assets classified as held for sale;
b. biological assets other than bearer plants;
c. the recognition and measurement of exploration and evaluation assets;
d. mineral rights and mineral reserves.

Initial Measurement
❖ Property, Plant, and Equipment (PPE) is initially measured at cost. Cost includes all the
amount necessary to bring the asset to its intended use. Aside from the purchase price,
costs of site preparation, delivery and handling, installation, related professional fees for
architects and engineers, and the estimated cost of dismantling and removing the asset
and restoring the site are included.

Subsequent Measurement
❖ After the initial measurement, the entity chooses either the cost model or the revaluation
model. Under the cost model, PPE is carried at its cost less any accumulated
depreciation and any accumulated impairment losses. In the revaluation model, PPE is
carried at its fair value at the date of the revaluation, less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.

Presentation
❖ Property, Plant, and Equipment (PPE) is presented on the Statement of Financial
Position of the company under non-current assets. Every reporting period, PPE is
remeasured and defined as book value after historical cost and depreciation are taken
into consideration and its net value is presented in the Balance Sheet after accumulated
depreciation.
Disclosure
❖ General disclosures for each class of PPE:
a. the measurement bases used;
b. the depreciation methods used;
c. the useful lives or depreciation rates used;
d. the gross carrying amount and the accumulated depreciation (aggregated with
accumulated impairment losses) at the beginning and end of the period.
Additional disclosures:
a. restrictions on title and PPE pledged as security for liabilities
b. expenditures to construct PPE during the period
c. contractual commitments for the acquisition of PPE
d. compensation for impairment losses
e. proceeds and cost of items produced during testing of PPE
f. changes in estimates relating to PPE
 IMPAIRMENT OF ASSETS

Definition/Nature of Account
❖ PAS 36 prescribes the procedures necessary to ensure that assets are not carried in
excess of their recoverable amount. If the carrying amount is greater than the
recoverable amount, the asset is impaired. The excess is impaired loss. If carrying
amount is equal or less than recoverable amount, the asset is not impaired.

Scope In
❖ PAS 36 applies to the following assets:
a. Property, Plant, and Equipment (PPE);
b. Investment property measured under the cost model;
c. Investment in associates, joint ventures and subsidiaries;
d. Intangible assets;
e. Goodwill.

Scope Out
❖ PAS 36 does not apply to certain assets including:
a. Inventories;
b. financial assets;
c. investment properties measured at fair value;
d. assets classified as held for sale.

Initial Measurement
❖ If the carrying amount of an asset exceeds its recoverable amount, the carrying amount
is reduced to the recoverable amount. The reduction is impairment loss. Carrying
amount is the amount at which an asset is recognized after deducting any accumulated
depreciation (amortization) and accumulated impairment losses. Recoverable amount is
the higher of an asset's (a.) Fair value less cost of disposal and (b.) Value in use. The
recoverable amount should be measured for the individual asset. However, if it is not
possible, determine the recoverable amount for the asset’s cash-generating unit. The
CGU is the smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or groups of assets.

Subsequent Measurement
❖ The entity assesses at the end of each reporting period whether there is an indication
that an impairment loss recognized in prior periods for an asset may no longer exist or
may have decreased. If such indication exists, the entity estimates the recoverable
amount of that asset. The reversal of impairment loss shall not result to a carrying
amount in excess of the asset's would-be carrying amount had no impairment loss been
recognized in prior periods and impairment loss on goodwill is never reversed.
Presentation
❖ Impairment loss is a result in a written-off on the carrying amount from the recoverable
value of an asset that the company listed on the balance sheet. Impairment loss is
presented both on the income statement as a negative account or as an expense, and a
deduction to the previous amount of the impaired asset from the balance sheet.

Disclosure
❖ Below are the key elements typically included in impairment disclosures:
a. The nature of the impaired assets (e.g., tangible, intangible, goodwill);
b. The circumstances or events that led to the recognition of the impairment loss;
c. The cash-generating unit (CGU) or group of assets affected;
d. The amount of the impairment loss recognized during the period;
e. The method used to measure the recoverable amount (e.g., value in use or fair
value less costs of disposal);
f. If an impairment loss is reversed, the amount of the reversal, the reason for the
reversal, the factors that led to the change in recoverable amount, the revised
carrying amount of the asset or CGU.
AUDITED FINANCIAL STATEMENT:
https://www.globe.com.ph/sites/globe.com.ph/files/2024-03/2023-Globe-Conso-AFS.pdf

SECTION: BSA 2G
GROUP 4
1. DE JESUS, Andrea
2. DICHOSO, Maureen
3. GARON, Ishie Dianne
4. MADRIGAL, Pamela
5. PAMINTUAN, Lai Anne Joy
6. PANGILINAN, Chariane
7. PIAÑAR, Joey
8. VICENCIO, Aaron Justin
BSA 2G – GROUP 2 (Borrowing Cost, Intangible Assets)
1. CABE, Micaela S.
2. ESCOTO, Ronalyn A.
3. FARIÑAS, Sofia Bianca D.
4. HERRERA, Niña Luisa C.
5. SOLIMAN, Althea Casandra G.
6. TANJUAQUIO, Roxanne M.
7. VELEZ, Chris Martin M.
8. VILLACURZA, Nicole D.
BORROWING COST
DEFINITION OR NATURE OF THE ACCOUNT
 Borrowing cost is defined as the interest and other costs incurred by the entity in connection of
borrowing of funds. This may include the following: interest expense calculated using the effective
interest method, finance charge with respect to finance lease, and exchange difference arising from
foreign currency borrowing to the extent that it is regarded as an adjustment to interest cost. The
related standard for this account is the PAS 23 Borrowing Cost.
SCOPE IN
 Borrowing costs are capitalized if they are mandatory for the qualifying asset. Meaning, the
borrowing is directly attributable to the acquisition, construction or production of a qualifying asset
and no borrowing costs would have been incurred if no expenditure on the qualifying asset had
been made. A qualifying asset is one that necessarily takes a substantial period of time to get ready
for the intended use or sale. This includes:
a. Inventories that take a long period of time to produce
b. PPE that takes a long period of time to construct or to get ready for its intended use
c. Investment property measured under the cost model that takes a long period of time to
construct
d. Intangible assets that take a long period of time to develop
SCOPE OUT
 Borrowing costs that are not directly attributable to a qualifying assets are expensed immediately.
The Standard does not require capitalization of borrowing cost related to the following asset:
a. Financial Assets
b. Inventories that are routinely produced over a short period of time or are mass produced
on a repetitive basis even if it takes an substantial period of time to get ready for sale
c. Assets that are ready for their intended use or sale when acquired
d. Assets measured at fair value, such as biological asset
INITIAL MEASUREMENT
 Borrowing costs are capitalized as part of the asset it is attributed to. Capitalization starts when all
the following conditions are met:
a. Expenditures for the asset are being incurred;
b. Borrowing costs are being incurred; and
c. Activities necessary to prepare the asset for its intended use or sale are being undertaken.
i. Technical and administrative work prior to the start of physical construction, such
as obtaining permits to construct
ii. Actual physical construction
SUBSEQUENT MEASUREMENT
 Capitalization of borrowing costs ceases when the qualifying asset is substantially complete. If the
construction of a qualifying asset is completed in parts, capitalization ceases for each part that is
completed and ready for its intended use. Capitalization continues for the uncompleted parts.
PRESENTATION AND DISCLOSURE
For Presentation:
 In accounting, borrowing costs are presented as either an expense or capitalized as part of an asset's
cost, depending on the circumstances:
 Expense: Borrowing costs that are not directly related to the acquisition, construction, or
production of a qualifying asset are recognized as an expense in the period they are
incurred.
 Capitalized: Borrowing costs that are directly related to the acquisition, construction, or
production of a qualifying asset are capitalized as part of the cost of the asset. This should
be done when it's probable that the costs will result in future economic benefits and can be
measured reliably.
 Qualifying assets are not segregated from other assets in the financial statements. They are
presented as regular assets under their normal classification as provided under other standards. For
example, if the qualifying asset is an item of PPE, it is presented as part of PPE and not segregated
and presented separately.
For Disclosure:
 Required disclosure for Borrowing Cost
a. The amount of borrowing costs capitalized during the period.
b. The capitalization rate used to determine the capitalizable borrowing costs.

SNIP OF THE MEASUREMENT, PRESENTATION, AND DISCLOSURE OF THE ACCOUNT IN

AN AUDITED FS
 INTANGIBLE ASSETS
DEFINITION OR NATURE OF THE ACCOUNT
 Intangible asset is “an identifiable non-monetary asset without physical substance.” Intangible
assets normally refer to “intangible resources such as scientific or technical knowledge, design and
implementation of new processes or systems, licenses, intellectual property, market knowledge and
trademarks (including brand names and publishing titles).”

SCOPE IN
 Intangible assets refers to the specific assets that qualify as intangible under accounting standard,
PAS 38 - Intangible Assets. Intangible assets must meet the following conditions:
a. An intangible asset must be separable (can be sold, transferred, licensed, or exchanged) or
arise from contractual or legal rights, regardless of whether they are separable.
 Patents and trademarks (arising from legal rights).
 Copyrights (contractual rights).
b. Intangible assets do not have physical substance but provide economic benefits.
 Software programs, which are intangible, even if delivered on physical media.
c. The intangible asset is expected to generate future cash flows or benefits.
 A trademark that enhances brand value and increases customer loyalty.
d. The entity must have control over the asset. This means it has the ability to obtain future
benefits and restrict others from accessing them.
 A company owning a patented technology it developed.

SCOPE OUT
 Items not recognized as intangible assets includes:
A. Goodwill (internally generated): Internally generated goodwill is not recognized as an
intangible asset. Only goodwill acquired in a business combination is recognized.
B. Research Costs: Research costs are expensed as incurred and not capitalized as intangible
assets. However, development costs may be capitalized if specific criteria are met (e.g.,
technical feasibility, intention to complete, and ability to use or sell the asset).
C. Training Costs: Costs incurred for training employees are expensed as incurred and not
recognized as intangible assets, as these are typically not identifiable and separable.
D. Customer Lists: Customer lists that are internally generated or not acquired through a
transaction are generally not recognized as intangible assets, because they are not
identifiable in the way required by PAS 38.
E. Brands, Mastheads, Publishing Titles: Internally generated brands, mastheads,
publishing titles, and similar items are generally not recognized as intangible assets.
However, they may be recognized if they are acquired in a business combination and can
be reliably measured.
F. Internally Developed Software: While software may qualify as an intangible asset,
internally developed software that does not meet certain capitalization criteria (such as
technical feasibility, intent to complete, etc.) is not recognized. Software development costs
are generally expensed unless they are for development activities that meet capitalization
criteria.
G. Social and Organizational Assets: Items such as employee relationships, organizational
culture, or general reputation of a company are not considered intangible assets, as they
cannot be individually identified and reliably measured.
H. Leases and Leasehold Rights (unless acquired): Leasehold rights or other similar rights
that are not separately acquired (e.g., through a business combination or purchase) are not
typically recognized as intangible assets under PAS 38.
I. Financial Assets (e.g., investments, receivables): These are treated separately under
financial instruments standards (PAS 32 and PAS 39).
 The costs to develop these items, including subsequent expenditures on them, are expensed.
INITIAL MEASUREMENT
 Intangible assets are initially measured at cost. The measurement of cost depends on how the
intangible asset is acquired. Intangible assets may be acquired through:
 A. Separate acquisition - the cost comprises of:
a) Its purchase price, including import duties and non-refundable purchase taxes,
after deducting trade discounts and rebates; and
b) b. Any directly attributable cost of preparing the asset for its intended use.
B. Acquisition as part of a business combination - the cost of an intangible asset is its fair
value at the acquisition date.

C. Acquisition by way of a government grant - may be initially measured either:

a) at fair value; or
b) alternatively, at nominal amount plus direct costs incurred in preparing the asset
for its intended use
D. Exchanges of assets - the measurement depends on whether the exchange transaction has
commercial substance or not.
a) With Commercial Substance - an exchange has a commercial substance if the
entity's subsequent cash flows are expected to change as a result of the exchange.
The intangible asset received is measured using the following order of priority:
1) Fair value of the asset Given up;
2) Fair value of the asset Received; or
3) Carrying amount of the asset Given up.
b) Lacks Commercial Substance - The intangible asset received is measured at the
Carrying amount of the asset Given up
E. Internal generation
SUBSEQUENT MEASUREMENT
 After initial recognition, an entity chooses either the cost model or the revaluation model as its
accounting policy and applies that policy to an entire class of intangible assets.
 Cost model - The intangible asset is carried at its cost less any accumulated amortization
and any accumulated impairment losses.
 Revaluation model - The intangible asset is carried at its fair value at the date of the
revaluation less any subsequent accumulated amortization and subsequent accumulated
impairment losses.
PRESENTATION AND DISCLOSURE
For Presentation:
 Intangible assets reported as non-current assets, net of amortization, and typically do not have
contra accounts shown. Such intangible assets are aggregated and presented as one line item under
the heading “Intangible assets” or “Other Intangible Assets” in the statement of financial position
and the breakdown of the line item is disclosed in the notes. Intangible assets are presented
separately from goodwill.
 Intangible assets are only listed on a balance sheet if they meet the following criteria: (a) they are
acquired assets, (b) they have an identifiable value (c) they have a useful lifespan, and (d) they can
be amortized.
 Internally developed intangible assets are not included on a company's balance sheet because they
do not have a price that can be used to assign fair market value
 Intangible assets with infinite life, such as goodwill, are not amortized systematically. Instead, they
are included on the balance sheet and periodically reviewed for impairment.
For Disclosure:
 The following are disclosed for each class of intangible assets, distinguishing between internally
generated intangible assets and other intangible assets:
A. Whether the useful lives are indefinite or finite and, if finite, the useful lives or the
amortization rates used;
B. Amortization methods used;
C. Gross carrying amount and any accumulated amortization (aggregated with accumulated
impairment losses) at the beginning and end of the period;
D. The line item(s) of the statement of comprehensive income in which any amortization of
intangible assets is included;
 E. A reconciliation of the carrying amount at the beginning and end of the period showing
increases and decreases to intangible assets and related accumulated amortization and
accumulated impairment loss.
F. Changes in accounting estimates in accordance with PAS 8.
G. Intangible assets assessed as having indefinite useful lives and reasons supporting the
assessments.
H. Intangible assets acquired by way of a government grant and initially recognized at fair
value
I. Any restriction on title to intangible assets (e.g., pledges of intangible assets).
J. Contractual commitments to acquire intangible assets.
K. Revaluation surplus recognized on revalued intangible assets and the methods and
assumptions used in estimating fair values of intangible assets.
L. Aggregate amount of research and development expenditure recognized as an expense
during the period.
 The following are encouraged, but does not require disclosures
A. Description of any fully amortized intangible asset that is still in use; and
B. Brief description of significant intangible assets controlled by the entity but not recognized
as assets because they did not meet the recognition criteria.
 Additional disclosures are required about:
 Intangible assets carried at revalued amounts [IAS 38.124]
 The amount of research and development expenditure recognized as an expense in the
current period [IAS 38.126]
SNIP OF THE MEASUREMENT, PRESENTATION, AND DISCLOSURE OF THE ACCOUNT IN
AN AUDITED FS

REFERENCES (FOR FS USED):

San Miguel Corporation Consolidated FS. https://www.sanmiguel.com.ph/storage/files/reports/SMC-
SEC%20FORM%2017-A%20(04.25.2022)%20Part%202-FINAL.pdf
Manila Electric Company Consolidated FS. https://meralcomain.s3.ap-southeast-1.amazonaws.com/2024-
03/msrd_manila_electric_company_sec_17c_2023_consolidated_afs_29_feb_2024.pdf
 PAS 41 Agriculture G3
DEFINITION OR NATURE
PAS 41 Agriculture sets out the accounting for agricultural activity. Agriculture means farming or the process
of producing crops and raising livestock.

SCOPE
PAS 41 Agriculture covers the following agricultural activities:
• Biological assets (living animals and living plants that are related to agricultural
activity)
Scope In
• Agricultural produce at the point of harvest
• Unconditional government grants related to a biological asset measured at its fair
value less cost to sell
PAS 41 Agriculture does not apply to:
• Land related to agricultural activity (PAS 16 and PAS 40)
Scope Out • Bearer Plants (PAS 16)
• Government grants related to bearer plants (PAS 20)
• Intangible assets related to agricultural activities (PAS 38)
• Animals related for recreational activities (PAS 16)

ACCOUNTING TREATMENT
With Fair Value
Initial
Measurement
Fair Value less Costs to Sell
Subsequent
Measurement

NOTE
Costs to Sell includes the following:
• Commissions to brokers
• Levies by regulatory agencies and commodity exchanges
• Transfer taxes and duties
Without Fair Value
Initial
Cost
Measurement
Subsequent Cost Model
Measurement (Cost less accumulated depreciation and accumulated impairment losses)
PRESENTATION
• Biological Assets are presented in the statement of financial position and are normally classified as
non-current assets.
DISCLOSURE
General:
• Aggregate gain/loss arising on initial recognition of biological assets and agricultural produce and
from the change in FVLCS of Biological Assets.
• Description of each group of biological assets.
• Description of the nature of activities involving each group of biological assets and physical quantities
of assets on hand at the end of the period and output of agricultural produce during the period.
• Restrictions on titles to biological assets.
• Commitments for the development or acquisition of biological assets.
• Financial risk management strategies related to agricultural activity.
• Reconciliation of changes in the carrying amount of biological assets, showing separately changes in
fair value less costs to sell, purchases, sales, harvesting, business combinations, and foreign exchange
differences.

Encouraged disclosure:
The following disclosures are encouraged but not required:
• Consumable and bearer biological assets.
• Mature and immature biological assets.
• Breakdown of total “Gain (loss) from changes in fair value less cost to sell during the period
attributable to price change and physical change.
AUDITED FINANCIAL STATEMENT
 PFRS 6 Depletion of G3
Mineral Resources
DEFINITION OR NATURE
PFRS 6 Exploration for and Evaluation of Mineral Resources is the search for mineral resources after the
entity has obtained legal rights to explore in a specific area, as well as the determination of the technical
feasibility and commercial viability of extracting the mineral resource.

Depletion
• is the removal, extraction, or exhaustion of natural resources.
• systematic allocation of the depletion base of a wasting asset over the period the natural resources is
extracted or produce.

Life Cycle of Wasting Assets

ACQUISITION EXPLORATION
DEVELOPMENT RESTORATION
Right to explore Includes evaluation

TANGIBLE
EXPLORATION AND
EVALUATION ASSET
INTANGIBLE

SCOPE
An entity shall apply the PFRS 6 to expenditures incurred:
• after the entity has obtained legal rights to explore
• before technical feasibility and commercial viability are demonstrable
Scope In

An entity shall not apply the PFRS 6 to expenditures incurred:

• before the entity has obtained legal rights to explore
Scope Out • after technical feasibility and commercial viability are demonstrable
 ACCOUNTING TREATMENT
Initial At Cost, which includes the following:
Measurement • Acquisition Cost
• Exploration and Evaluation Cost
• Intangible Development Cost
• Estimated Restoration Cost
Subsequent After recognition, an entity applies either the:
Measurement • Cost model, or
• Revaluation model

NOTE
Examples of expenditures that might be included in the initial measurement of exploration and evaluation
assets:
• Acquisition of rights to explore
• Exploratory drilling
• Trenching
• Sampling
• General and administrative costs directly attribute to exploration and evaluation activities.
PRESENTATION
• An entity treats exploration and evaluation assets as a separate class of assets.

DISCLOSURE
• its accounting policies for exploration and evaluation expenditures including the recognition of
exploration and evaluation assets
• the amounts of assets, liabilities, income and expense and operating and investing cash flows arising
from the exploration for and evaluation of mineral resources.
AUDITED FINANCIAL STATEMENT
REFERENCES:
https://www.philexmining.com.ph/wp-content/uploads/2022/05/2021-SEC-FORM-17A-ANNUAL-
REPORT.pdf?fbclid=IwY2xjawG3-1xleHRuA2FlbQIxMAABHQUBqu04qU9rToDyBepP3-i-
iyOa2s29P4_WzfoOKLtP6yikkx3rWJbsTQ_aem_OhfDIfzs2zetWoqRdDEEBA
https://cdn.cse.lk/cmt/upload_report_file/486_1692759165276.pdf?fbclid=IwY2xjawG3_hhleHRuA2FlbQIxMAABHVud9b
RE0SH4qTIbz35ScJEJKnvuLCjpgZ9MhSW1EeijgX_sfVBXg2vrUQ_aem_BuX26MCiHzXnU357qkWzTw

GROUP 3

1. AQUINO, Marty S.
2. CASTRO, Amber Jasmine L.
3. MATILDO, Danissa Joy E.
4. MORALES, Angela T.
5. MUSNI, Mary Bernadette R.
6. QUINTELA, Carmella Denize
7. SALONGA, Love Jendel M.
8. SWING, Christine P.