CHAPTER

6
NOTES TO FINANCIAL
STATEMENTS AND
DISCLOSURE

CONCEPT AND
NATURE

THE PREPARATION OF NOTES TO

FINANCIAL STATEMENTS ARE NOT USUALLY
GIVEN MUCH ATTENTION BY STUDENTS IN
FINANCIAL ACCOUNTING
SINCE
THE
GREATER BULK OF THEIR TIME AND EFFORT
ARE SPENT IN SOLVING ACCOUNTING
PROBLEMS.
THE NOTES, HOWEVER, ARE OF THE SAME
IMPORTANCE WITH OTHER ELEMENTS.

Notes to financial statements are one of the

components of a complete set of financial
statements. PAS 1 provides the guidelines and
mechanics for proper preparation and preparation
and presentation of notes.
Notes to the financial statements, or simply
notes, contain information in addition to the
presented in the statement of financial position,
statement of comprehensive income, statement of
changes in equity and statement of cash flow.

Notes provide narrative descriptions or disaggregations of item of items in those statements and
information about items that do not qualify for
recognition in those statements.
Notes shall, as far as practicable, be presented in a
systematic matter. Each item on the face of the balance sheet,
income statement, statement of changes in equity
and cash
flow statement shall be cross-referenced to any related
information in the notes.

Financial statements shall present fairly the

financial position, financial performance and cash
flows of an entity.

FAIR PRESENTATION REQUIRES THE

FAITHFUL REPRESENTATION OF THE EFFECTS
OF TRANSACTIONS, OTHER EVENTS AND
CONDITIONS IN ACCORDANCE WITH THE
DEFINITION AND RECOGNITION CRITERIA
FOR ASSETS, LIABILITIES, INCOME AND
EXPENSES SET OUT IN THE FRAMEWORK.
THE APPLICATION OF PFRS, WITH
ADDITIONAL
DISCLOSURE
WHEN
NECESSARY, IS PRESUMED TO RESULT IN
FINANCIAL STATEMENTS THAT ACHIEVE A
FAIR PRESENTATION.

OBJECTIVES OF NOTES
TO FINANCIAL
STATEMENTS

An entity is required to disclose, either on the

face of the financial statements or in the notes, all
information required by PFRS or Interpretations
that will make the financial statements
understandable and relevant to users.
The primary objective of notes, therefore, is to
enhance the requirement of complete disclosure.

STRUCTURE OF NOTES
Notes are normally presented in the following order to
assists user in understanding the financial statements and
comparing them with financial statements of other entities:
a. A statement of compliance with PFRS.
b. A summary of significant accounting policies applied.
c. Supporting information for items presented in the financial
statements in the order in which each statement and each
line item is presented.
d. Other disclosures including contingent liabilities,
unrecognized contractual commitments and non-financial
disclosures like entitys financial risk management
objectives and policies.

PAS 1 PROVIDES THE FOLLOWING SPECIFIC

OBJECTIVES OF NOTES:
1. TO PRESENT INFORMATION ABOUT THE BASIS
OF PREPARATION OF THE FINANCIAL
STATEMENTS
AND
THE
SPECIFIC
ACCOUNTING POLICIES USED.
2. TO DISCLOSE THE INFORMATION REQUIRED
BY PFRS THAT ID NOT PRESENTED IN THE
FINANCIAL STATEMENTS.
3. TO PROVIDE ADDITIONAL INFORMATION THAT
IS NOT PRESENTED IN THE FINANCIAL
STATEMENTS, BUT IS RELEVANT TO AN
UNDERSTANDING OF ANY OF THEM.

STATEMENT OF COMPLIANCE
WITH PFRS
An entity whose financial statements comply with
PFRS shall make an explicit and unreserved statement
of such compliance in the notes.
Financial statements shall not be described as
complying with Philippine Financial Reporting Standards
unless they comply with all the
requirements of PFRSs.

In some circumstances, it may be necessary or desirable

to vary the ordering of specific items within the notes. For
example, information on changes in fair value recognized in
income or loss may be combined with information on
maturities of financial instruments, although the former
disclosures relate to the income statement and the latter
relate to the balance sheet.

ILLUSTRATION 6.1
THE FINANCIAL STATEMENTS OF
SOUTHERN CHRISTIAN COLLEGE, A
NON-STOCK,
NON-PROFIT
EDUCATIONAL INSTITUTION, FOR THE
YEAR ENDED DECEMBER 31, 2015
COMPLIED
FULLY
WITH
THE
REPORTORIAL REQUIREMENTS OF THE
ACCOUNTING STANDARDS.

The note shall appear as follows:

Note 1 Compliance with PFRS

The accompanying financial statements have been
prepared in
accordance with the Philippine Financial
Reporting Standards. The
accounting policies have been applied consistently and conform in all
material respects with the Standards.
The School has adopted all relevant and applicable accounting
standards, including interpretations to existing standards, which
are mandatory for all entities beginning on or after January 1, 2005.

It can be observed in the first statement of Notes 2 that

business has made an explicit statement as to its
compliance with the Standards.

SUMMARY OF
SIGNIFICANT
ACCOUNTING POLICIES

ACCOUNTING
POLICY
SHOULD
BE
DISCLOSED,
MANAGEMENT
CONSIDERS
WHETHER DISCLOSURE WOULD ASSIST
USERS
IN
UNDERSTANDING
HOW
TRANSACTIONS, OTHER EVENTS AND
CONDITIONS ARE REFLECTED IN THE
REPORTED FINANCIAL PERFORMANCE AND
FINANCIAL POSITION.
DISCLOSURE
OF
PARTICULAR
ACCOUNTING POLICIES IS ESPECIALLY
USEFUL TO USERS WHEN THOSE POLICIES
ARE
SELECTED
FROM ALTERNATIVES
ALLOWED
IN
STANDARDS
AND
INTERPRETATIONS.

An entity shall disclose in the summary of

significant accounting policies:
a. the measurement basis (or bases) used
in preparing the financial statements; and
b. the other accounting policies used that
the relevant to an understanding of the
financial statements.

It is important for users to be informed of the measurement

basis or bases used in the financial statements because the
basis on which the financial statements are prepared
significantly affects their analysis.
The different measurements bases employed in the
preparation of the financial statements are historical cost,
current cost, net realizable value and present value.
When more than one measurement basis is used in the
financial statements, for example when particular classes of
assets are revalued, it is sufficient to provide and indication of
the categories of assets and liabilities to which each
measurement basis is applied.

POLICIES THE JUDGMENTS APART FROM

THOSE
INVOLVING
ESTIMATIONS
MANAGEMENT HAS MADE IN THE PROCESS
OF APPLYING THE ENTITYS ACCOUNTING
POLICIES THAT HAVE THE MOST SIGNIFICANT
EFFECT ON THE AMOUNTS RECOGNIZED IN
THE FINANCIAL STATEMENTS.
IN THE PROCESS OF APPLYING THE
ENTITYS
ACCOUNTING
POLICIES,
MANAGEMENT
MAKES
VARIOUS
JUDGMENTS,
APART
FROM
THOSE
INVOLVING
ESTIMATIONS,
THAT
CAN
SIGNIFICANTLY AFFECT THE AMOUNTS
RECOGNIZED
IN
THE
FINANCIAL
STATEMENTS.

For example,
determining:

management

makes

judgments

in

a. whether financial assets are held-to-maturity

investments;
b. when substantially all the significant risks and
rewards of ownership of financial assets and lease
assets are transferred to other entities.
c. whether, in substance, particular sales of goods are
financing arrangements and therefore do not give
rise to revenue; and
d. whether the substance of the relationship between
the entity and a special purpose entity indicates that
the special purpose entity is controlled by the entity.

An accounting policy may be significant

because of the nature of the entitys operation even
if amounts for current and prior periods are not
material. It is also appropriate to disclosure each
significant accounting policy that is not
specifically required by the Philippine Financial
Reporting Standards.

Illustration 6.2
The notes indicating the summary of significant
accounting policies adopted and applied by Southern Christian
College in the preparation of its 2015 financial statements
may appear as follows:
Note 2

Summary of Significant Accounting Policies

Basis of accounting. The financial statements have been prepared on

the basis historical cost conventions except for property and
equipment which are carried at revalued amounts. The financial
statements are presented in Philippine peso, which is the functional
currency of the School. All values are recorded to the nearest
Philippine peso except when otherwise indicated.

Note 2

Summary of Significant Accounting Policies

Cash and cash equivalents. Cash and cash equivalents are carried in
the balance sheet at face value which serves as the cost. Cash and
cash equivalents comprise cash on hand, deposit held at call with
banks, and time deposits with banks that can be pre-terminated
anytime.
Trade and other receivables. Receivable from students arising from
tuition and fees and receivables from officers and employees and
other debtors are carried at their original assessments less provision
made for impairment of these receivables. A provision for impairment
of these receivables is established where there is objective evidence
that the School would not be able to collect the amounts due
according to the original terms of receivables.
Inventories. Inventory of textbooks and supplies are stated at the
lower of cost or net realizable value determined by the first-in, firstout method.

Note 2 Summary of Significant Accounting Policies

Property and equipment. The property and equipment are carried at
revalued amounts less accumulated depreciation and any impairment
in value, if any. An independent firm of appraisers undertook the
property revaluations on January 24, 200. The net appraisal increment
resulting from the revaluation of the properties was credited to
Revaluation Increment in Property and Equipment shown under the
Fund Balances caption in the balance sheet. Subsequent acquisitions
were carried at cost less accumulated depreciation. Depreciation on
cost and on appraisal increase is computed on the straight-line
method over the estimated useful lives of the properties as follows: (a)
buildings and improvements - 10 to 25 years, (b) furniture, fixtures
and equipment - 3 to 5 years, (c) transportation equipment -10 years,
(d) library books and references - 3 to 5 years, and (e) land is not
depreciated.

Note 2 Summary of Significant Accounting Policies

Investments. Investments intended to be held for an indefinite period
of time, which may be sold in response to needs for liquidity or
changes in interest rates, are classified as available-for-sale
investments and are included in non-current assets unless
management has the express intention of holding the investment for
less than 12 months from the balance sheet date or unless they will
need to be sold to raise operating capital, in which case they are
included in current assets.
Trade and other payables. Trade payables and accruals are
recognized initially at their nominal value and subsequently measured
at amortized cost less settlement payments.

Note 2 Summary of Significant Accounting Policies

Revenue and cost recognition. Tuition and fees are recognized as
income over the corresponding school term. Tuition and fees for the
next school-term collected during the period are treated as unearned
income in the balance sheet. Other sources of income are recognized
on the cash method. Cost and expenses are recognized in the income
statement upon utilization of the service or at the date they are
incurred.
Donations received. Expenses paid for by funds from the Special
Funds accounts are recorded in the books with corresponding credits
to Donation Income account. Likewise, capital expenditures obtained
with funds from the Special Funds accounts are recorded in the books
with corresponding credits to Donated Capital account. Donations
from all resources are valued at cost or fair market value whichever is
higher at the time the donations are received.

SUPPORTING INFORMATION FOR

ITEMS PRESENTED ON FACE OF
FINANCIAL STATEMENTS

The elements comprising the line items that appear in

the financial statements are disclosed in the notes
Illustration 6.3
The following notes support the various line items appearing
on face of the financial statements of Southern Christian College
for year 2015:
Note 3 Cash and Cash Equivalents
The account cash and cash equivalents consists of the following items:
2015
2014
Cash on hand
80,000
190,000
Cash in various local banks
200,000
380,000
Unrestricted short-term investments
1,200,000 500,000
1,480,000
1,070,000

Note 4 Trade and Other Receivables

This account consists of receivable arising from:
2015

2014

Students tuition
2014 2015
3,000,000
2013 2014
1,200,000 1,500,000
2012 2013
1,300,000 1,450,000
2011 2012
800,000
950,000
2010 2011
1,100,000 1,250,000
2010 and prior years
2,300,000
2,420,000
9,700,000 7,570,000
Less: Allowance for impairment loss 4,200,000
4,200,000
Net
5,500,000 3,370,000
Officers and employees
1,500,000 2,300,000
Less: Allowance for impairment loss
50,000
50,000
Net
1,450,000 2,250,000
Trade and other receivables
6,950,000 5,620,000

Note 4 Trade and Other Receivables

Management believed that the receivables were not impaired at
the end of the year 2009 hence no additional provisions for
impairment losses were recognized. During 2008, additional
allowance for impairment losses of receivables amounting to
P1,000,000 was provided in the books to cover for impairment
losses.
Accounts receivable, officers and employees. The accounts
receivable from officers and employees represents salary
advances to the faculty on scholarship programs.

OTHER
DISCLOSURES
An entity shall disclose in the notes:
a. the amount of dividends proposed or declared before the
financial statements were authorized for issue but not recognized as a
distribution to equity holders during the period, and the related amount per
share; and
b. the amount of any cumulative preference dividends not
recognized.

Also, an entity shall disclose the following if not disclosed

elsewhere in information published with the financial statements:
a. the domicile and legal form of the entity, its country of
incorporation and the address of its register office (or principal
place of business, if different from the registered office);
b. a description of the nature of the entitys operation and its
principal activities; and
c. the name of the parent and the ultimate parent of the group.

Illustration 6.3
Other information required by the Philippine Financial
Accounting Standards to be disclosed may appear as follows for
Southern Christian College:

Note 1

Organization

The Cotabato and Davao Annual Conference of the United Church

of Christ in the Philippines founded Southern Christian College,
Inc. on August 4, 1949. On March 9,1999, the Securities and
Exchange Commission (SEC) approved the amendments filed by
the School extending its life for another fifty (50) years. All funds
and revenues derived by the School are used for the
accomplishment or promotion enumerated in its Articles of
Incorporation.
The registered office and place of operation is located in its own
premises at Quezon Avenue, Midsayap, Cotabato.

Note 1

Organization

The School, being a non-stock, non-profit educational institution, is

exempt from internal revenue taxes on all revenue (including grants,
donations and all revenue derived from the operation of its cafeterias/
canteens, dormitories, and bookstores owned and operated by the
School as auxiliary activities within its premises) and assets used
actually, directly and exclusively for educational purposes in
accordance with the provisions of Article XIV Section 4 (3) of the
1987 Constitution. Pursuant to Section 109 (m) of the Tax Code, the
School is also exempt from VAT, being an accredited institution by
the Department of Education (DEP-ED) and by the Commission on
Higher Education (CHED).

SOURCES OF
ESTIMATION
UNCERTAINTY

An entity shall disclose in the notes information about the

key assumptions concerning the future, and other key
sources of estimation uncertainty at the balance sheet date,
that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the
next financial year.

In respect of those assets and liabilities, the notes

shall include details of:
a. their nature; and
b. their carrying amount as at the date of the
statement of financial position.

Determining the carrying amount of some assets and liabilities

requires estimation of the effects of uncertain future events on
those assets and liabilities at the balance sheet date.
For example, in the absence of recently observed market prices
used to measure the following assets and liabilities, futureoriented estimates are necessary to measure the recoverable
amount of classes of property, plant and equipment, the effect of
technological obsolescence on inventories, provisions subject to
the future outcome of litigation in progress, and long-term
employee benefit liabilities such as pension obligations. These
estimates involve assumptions about such items as the risk
adjustments to cash flows or discount rates used, future changes
in salaries and future changes in prices affecting other costs.

CASH AND CASH

EQUIVALENTS
An entity shall disclose the components of cash
and cash equivalents and shall present a
reconciliation of the amounts in its cash flow
statements with the equivalent items reported in the
balance sheet. (Paragraph 45, PAS 7)
An entity shall disclose, together with a
commentary by management, the amount of
significant cash and cash equivalent balances held
by the entity that are not available for use by the
group. (Paragraph 48, PAS 7)

DISCLOSURE
REQUIREMENTS OF
SOME LINE ITEMS

INVENTO
RIES
The financial statements shall disclose:
a. the accounting policies adopted in measuring
inventories, including the cost formulas used;
b. the total carrying amount of inventories and the
carrying amount in classifications appropriate to
the entity;
c. the carrying amount of inventories carried at fair
value less cost to sell;
d. the amount of inventories recognized as an
expense during the period;
e. the amount of any write-down of inventories
recognized as an expense in the period in accordance
with paragraph 34;

The financial statements shall disclose:

f. the amount of any reversal of any write-down that is
recognized as a reduction in the amount of inventories
recognized as expense in the period in accordance with
paragraph 34;
g. the circumstances or events that lead to the reversal of a
write-down of inventories in accordance with paragraph
34; and
h. the carrying amount of inventories pledged as security of
liabilities. (Paragraph 36, PAS 2).

Paragraph 34 of PAS 2 states that:

When inventories are sold, the carrying amount of
those inventories shall be recognized as an expense in
the period in which the related revenue is recognized.
The amount of any write-down of inventories to net
realizable value and all losses of inventories shall be
recognized as an expense in the period the write-down
or loss occurs. The amount of any reversal of any
write-down of inventories, arising from an increase in
net realizable value, shall be recognized as a reduction
in the amount of inventories recognized as an expense
in the period in which the reversal occurs.

BIOLOGICAL
ASSETS
(AGRICULTURE)

An entity shall disclose the aggregate gain or loss

arising during the current period on initial recognition of
biological assets and agricultural produce and from the
change in fair value less estimated point-of-sale costs of
biological assets. (Paragraph 40, PAS 41)
If

not disclosed elsewhere in information published

with the financial statements, an entity shall describe:
a. the nature of its activities involving each group of
biological assets; and
b. non-financial measures or estimates of the physical
quantities of:
each group of the entitys biological assets at the end
of the period; and
output of agricultural produce during the period.
(Paragraph 46, PAS 41)

An entity shall disclose the fair value less estimated

point-of-sale of agricultural produce harvested during the
period, determined at the point of harvest. (Paragraph 48,
PAS 41)
An entity shall disclose:
a. the existence and carrying amounts of biological assets
whose title is restricted and the carrying amounts of
biological assets pledged as security for liabilities;
b. the amount of commitments for the development or
acquisition of biological assets; and
c. financial risk management strategies related to
agricultural activity. (Paragraph 49, PAS 41)

An entity shall present a reconciliation of changes in the

carrying amount of biological assets between the beginning and
the end of the current period. The reconciliation shall include:
a. the gain or loss arising from changes in fair value less estimated
point-of-sale costs;
b. increases due to purchases;
c. decreases attributable to sales and biological assets classified as
held for sale or included in a disposal group that is classified as
held for sale;
d. decreases due to harvests;
e. increases resulting from business combinations;
f. net exchange differences arising on the translation of financial
statements into a different presentation currency, and on the
translation of a foreign operation into the presentation of the
reporting entity; and
g. other changes. (Paragraph 50, PAS 41)

If an entity measures biological assets at their cost less any

accumulated depreciation and any accumulated impairment
losses at the end of the period, the entity shall disclose for such
biological assets:
a. a description of the biological assets;
b. an explanation of why fair value cannot be measured reliably;
c. if possible, the range of estimates within which fair value is
highly likely to lie;
d. the depreciation method used;
e. the useful lives or the depreciation rates used; and
f. the gross carrying amount and the accumulated depreciation
(aggregated with accumulated impairment losses) at the
beginning and end of the period. (Paragraph 54, PAS 41)

INVESTMENT IN
ASSOCIATES

The following disclosures shall be made:

a. the fair value of investment in associates for which there are
published price quotations;
b. summarized financial information of associates, including the
aggregated amounts of assets, liabilities, revenues and income
or loss;
c. the reasons why the presumption that an investor does not
have significant influence is overcome if the investor holds,
directly or indirectly through subsidiaries, less than 20 percent
of the voting or potential voting power of the investee but
concludes that it has significant influence;
d. the reason why the presumption that an investor has
significant influence is overcome if the investor holds, directly
or indirectly through subsidiaries, 20 percent or more of the
voting or potential voting power of the investee but concludes
that it does not have significant influence;

The following disclosures shall be made:

e.

the reporting date of the financial statements of an associate

when such financial statements are used in applying the equity
method and are as of a reporting date or for a period that is
different from that of the investor, and the reason for using a
different reporting date or different period;
f. the nature and extent of any significant restrictions (e.g.,
resulting from borrowing arrangements or regulatory
requirements) on the ability of associates to transfer funds to
the investor in the form of cash dividends, or repayment of
loans and advances;
g. the unrecognized share of losses of an associate, both for the
period and cumulatively, if an investor has discontinued
recognition of its share of losses of an associate;

The following disclosures shall be made:

h. the fact that an associate is not accounted for using the equity
method; and
i.
summarized financial information of associates, either
individually or in groups, that are not accounted for using the
equity method, including the amounts of total assets, total
liabilities, revenues and income or loss. (Paragraph 37, PAS 28)
Investments in associates accounted for using the equity
method shall be classified as non-current assets. The investors
share of the income or loss of such associates, and the carrying
amount of those investments, shall be separately disclosed. The
investors share of any discontinued operations of such associates
shall also be separately disclosed. (Paragraph 38, PAS 28)

The investors share of changes recognized directly in life

associates equity shall be recognized directly in equity by
the investor and shall be disclosed in the statement of
changes in equity. (Paragraph 39, PAS 28)
The investor shall also disclose:
a. its share of the contingent liabilities of an associate incurred
jointly with other investors; and
b. those contingent liabilities that arise because the investor is
severally liable for all or part of the liabilities of the associate.
(Paragraph 40, PAS 28)

INTERESTS IN JOIN
VENTURES

A venturer shall disclose the aggregate amount of the

following contingent liabilities, unless the probability of
loss is remote, separately from the amount of other
contingent liabilities:
a. any contingent liabilities that the venturer has incurred in
relation to its interests in joint ventures and its share in
each of the contingent liabilities that have been incurred
jointly with other venture;
b. its share of the contingent liabilities of the joint ventures
themselves for which it is contingently liable; and
c. those contingent liabilities that arise because the venturer
is contingently liable for the liabilities of the other
ventures of a joint venture. (Paragraph 54, PAS 31)

A venturer shall disclose the aggregate amount of the

following commitments in respect of its interest in joint
ventures separately from other commitments:
a. any capital commitments of the venturer in relation to its
interest in joint ventures and its share in the capital
commitments that have been incurred jointly with other
venturer; and
b. its share of the capital commitments of the joint ventures
themselves. (Paragraph 55, PAS 31)

A venturer shall disclose a listing and description of

interest in significant joint ventures and the proportion of
ownership interest held in jointly controlled entities. A
venturer that recognizes its interest in jointly controlled
entities using the line-by-line reporting format for
proportionate consolidation or the equity method shall
disclose the aggregate amounts of each of current assets,
long-term assets, current liabilities, long-term liabilities,
income and expenses related to its interest in joint ventures.
(Paragraph 56, PAS 31)
A venturer shall disclose the method it uses to recognize
its interest in jointly controlled entities. (Paragraph 57, PAS
31)

INVESTMENT IN
PROPERTY

An entity shall disclose:

a. whether it applies the fair value model or the cost model.
b. if it applies the fair value model, whether, and in what
circumstances, property interest held under operating
leases are classified and accounted for as investment
property.
c.

when classification is difficult, the criteria it uses to

distinguish investment property from owner-occupied
property and from property held for sale in the ordinary
course of business.

An entity shall disclose:

d. the methods and significant assumptions applied in
determining the fair value of investment property,
including a statement whether the determination of fair
value was supported by market evidence or was more
heavily based on other factors (which the entity shall
disclose) because of the nature of the property and lack
of comparable market data.
e. the extent to which the fair value of investment property
(as measured or disclosed in the financial statement) is
based on a valuation by an independent valuer who holds
a recognized and relevant professional qualification and
has recent experience in the location and category of the
investment property being valued. If there has been so
such valuation, that fact shall be disclosed.

An entity shall disclose:

f. the amount recognized in income or loss for

rental income from investment property;

direct operating expenses (including repairs and maintenance)
arising from investment property that generated rental income
during the period;
direct operating expenses (including repairs and maintenance)
arising from investment property that did not generated rental
income during the period; and
the cumulative change in fair value recognized in income or
loss on a sale of investment property from a pool of assets in
which the cost model is used into a pool in which the fair
value model is used.

An entity shall disclose:

g. the existence and mounts of restrictions on the reliability
of investment property or the remittance of income and
proceeds of disposal.
h. contractual obligations to purchase, construct or develop
investment property or for repairs, maintenance or
enhancements. (Paragraph 75, PAS 40)

PROPERTY, PLANT
AND EQUIPMENT

The financial statements shall disclose, for each class of

property, plant and equipment:
a. the measurement bases used for determining the gross
carrying amount;
b. the depreciation methods used;
c. the useful lives or the 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; and
e. a reconciliation of the carrying amount at the beginning
and end of the period showing:

additions;
assets classified as held for sale or included in a disposal
group classified as held for sale;

acquisitions through business combinations;

increases or decreases resulting from revaluations and from

impairment losses recognized or reversed directly in equity;

impairment losses recognized or reversed in profit or loss;

depreciation;

the next exchange differences arising on the translation of the

financial statements from the functional currency into a
different presentation currency, including the translation of a
foreign operation into the presentation currency of the
reporting entity; and

other changes. (Paragraph 73, PAS 16)

The financial statements shall also disclose:

a. the existence and amounts of restrictions on title, and
property, plant and equipment pledged as security for
liabilities;
b. the amount of expenditures recognized in the carrying
amount of an item of property, plant and equipment in
the course of its construction;
c. the amount of contractual commitments for the
acquisition of property, plant and equipment; and
d. if it is not disclosed separately on the face of the income
statement, the amount of compensation from third parties
for items of property, plant and equipment that were
impaired, lost or given up that is included in income or
loss (Paragraph 74, PAS 16)

If items of property, plant and equipment are stated at revalued

amounts, the following shall be disclosed:
a. the effective date of the revaluation;
b. Whether an independent valuer was involved;
c. the methods and significant assumptions applied in estimating
the items fair values;
d. the extent to which the items fair values were determined
directly by reference to observable prices in an active market or
recent market transactions on arms length terms or were
estimated using other valuation techniques;
e. for each revalued class of property, plant and equipment, the
carrying amount that would have been recognized had the assets
been carried under the cost model; and
f. the revaluation surplus, indicating the change for the period and
any restrictions on the distribution of the balance to
shareholders.

INTANGIBLE
ASSETS

An entity shall disclose the following for each class of

intangible assets distinguishing between internally generated
intangible assets and other intangible assets:
a. whether the useful lives of indefinite or finite and, if finite, the
useful lives or the amortization rates used;
b. the amortization methods used for intangible assets with finite
useful lives;
c. the 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 income statement 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;

additions, indicating separately those from internal development,

those acquired separately, and those acquired through business
combinations;
assets classified as held for sale or included in a disposal group
classified as held for sale;
increases or decreases during the period resulting from revaluation
and from impairment losses recognized or reversed directly in
equity;
impairment losses recognized in income or loss during the period;
impairment losses reversed in income or loss during the period;
any amortization recognized during the period;
net exchange differences arising on the translation of the financial
statements into the presentation currency, and on the translation of a
foreign operation into the presentation currency of the entity; and
other changes in the carrying amount during the period. (Paragraph
118, PAS 38)

An entity shall also disclose:

a. for an intangible assets assessed as having an indefinite
useful life, the carrying amount of that asset and the reasons
supporting the assessment of an indefinite useful life. In
giving these reasons, the entity shall describe the factor(s) that
played a significant role in determining that the asset has an
indefinite useful life.
b. a description, the carrying amount and remaining
amortization period of any individual intangible asset that is
material to the entitys financial statements.

c. for intangible assets acquired by way of a government grant

and initially recognized at fair value:

the fair value initially recognized for these assets;

Their carrying amount; and
Whether they are measured after reduction under the cost model or
the revaluation model.

d.

the existence and carrying amounts of intangible assets whose title is

restricted and the carrying amount of intangible assets pledged as
security for liabilities.

e.

the amount of contractual commitments for the acquisition of

intangible assets. (Paragraph 122, PAS 38)

LEASES

FINANCE
LEASE
Lessees shall make the following disclosures for finance leases:
a. for each class of asset, the net carrying amount at the balance sheet
date.
b. a reconciliation between the total of future minimum lease payments
at the balance sheet date, and their present value. In addition , an
entity shall disclose the total of future minimum lease payments at
the balance sheet date, and their present value, for each of the
following periods:
not later than one (1) year;
later than one year and not later than five (5) years;
later than five (5) years.
c. contingent rents recognized as an expense in the period.
d. the total of future minimum sublease payments expected to be
received under non-cancelable subleases at the balance sheet date.

e. a general description of the lessees material leasing arrangement

including, but not limited to, the following:

the basis on which contingent rent payable is determined;

the existence and terms of renewal or purchase options and
escalation clauses; and
restrictions imposed by lease arrangements, such as those
concerning dividends, additional debt, and further leasing.
(Paragraph 31, PAS 17)

Lessors shall disclose the following for finance lease:

a. a reconciliation between the gross investment in the lease at the
balance sheet date, and the present value of minimum lease payments
receivable at the balance sheet date. In addition, an entity shall
disclose the gross investment in the lease and the present value of
minimum lease payments receivable at the balance sheet date for each
of the following periods:
not later than one (1) year;
later than one (1) year and not later than five(5) years;
later than five (5) years.
b. unearned finance income.
c. the unguaranteed residual value accruing to the benefit of the lessor.
d. the accumulated allowance for uncollectible minimum lease payments
receivable.
e. contingent rents recognized as income in the period.
f. a general description of the lessor material leasing arrangements.
(Paragraph 47, PAS 17)

OPERATING
LEASE
Lessees shall make the following disclosures for operating leases:
a. the total of future minimum lease payments under non-cancelable
operating leases for each of the following periods:

not later than one (1) year;

later than one (1) year and not later than five (5) years;
later than five (5) years.

b. the total of future minimum sublease payments expected to be

received under non-cancelable subleases at the balance sheet date.
c. lease and sublease payments recognized as an expenses in the
period, with separate amounts of minimum lease payments
contingent rents and sublease payments.

d. a general description of the lessees significant leasing

arrangement, including but not limited to, the following:

the basis on which contingent rent payable is determined;

the existence and terms of renewal or purchase options and escalation
clauses; and
restrictions imposed by lease arrangements, such as those concerning
dividends, additional debt, and further leasing. (Paragraph 35, PAS 17)

Lessors shall disclose the following for operating lease:

a. the future minimum lease payments under non-cancelable
operating leases in the aggregate and for each of the following
periods:

not later than one (1) year;

later than one (1) year and not later than five (5) years;
later than five (5) years.

b. total contingent rents recognized as income in the period.

c. a general description of the lessors leasing arrangements.
(Paragraph 56, PAS 17)

EMPLOYEE
BENEFITS

An entity shall disclose the following information about define

benefit plans:
a. the entitys accounting policy for recognizing actuarial gains and
losses;
b. a general description of the type of plan;
c. a reconciliation of the assets and liabilities recognized in the balance
sheet, showing at least:

the present value at the balance sheet date of define benefit obligations that
are wholly unfounded;
the present value (before deducting the fair value of plan assets) at the
balance sheet date of defined benefit obligations that are wholly or partly
funded;
the fair value of any plan assets at the balance sheet date;
the net actuarial gains or losses not recognized in the balance sheet;
the past service cost not yet recognized in the balance sheet;

any amount not recognized as an asset because of the limit in

Paragraph 58(b) of PAS 19;
the fair value at the balance sheet date of any reimbursement right
recognized as an asset with a brief description of the link between the
reimbursement right and the related obligation; and
the other amounts recognized in the balance sheet.

d. the amounts included in the fair value of plan assets for:

for each category of the reporting entitys own financial instruments; and
any property acquired by, or other assets used by, the reporting entity.

e. a reconciliation showing the movements during the period in the net

liability (or asset) recognized in the balance sheet;

f.

the total expense recognized in the income statement for each of the
following, and the line item(s) of the income statement in which they
are included:

current service cost;

interest costs;
expected return on plan assets;
expected return on any reimbursement right recognized as an asset;
actuarial gains and losses;
past service costs;
the effect of any curtailment of settlement;

g. the actual return on plan asset, as well as the actual return on any
reimbursement right recognized as an asset.

h. the principal actual assumptions used as at the balance sheet

including, where applicable:

the discount rates;

the expected rates of return on any plan assets for the periods presented in the
financial statement;
the expected rates of return for the periods presented in the financial
statements on any reimbursement right recognized as an asset;
the expected rates of salary increases (and of changes in an index or other
variable specified in the formal or constructive terms of plan as the basis for
future benefit increases);
medical cost trend rates; and
any other material actuarial assumptions used.

An entity shall disclose each actuarial assumption in absolute terms

(for example, as an absolute percentage) and not just as a margin between
different percentages or other variables. (Paragraph 120, PAS 19)

REVENUE

An entity shall disclose:

a. the accounting policies adopted for the recognition of revenue,
including the methods adopted to determine the stage of completion
of transactions involving the rendering of services;
b. the amount of each significant category of revenue recognized during
the period, including revenue arising from:

the sales of goods;

the rendering of services;
interest;
royalties;
dividends; and

c. the amount of revenue arising from exchanges of goods or services

included in each category of revenue. (Paragraph 55, PAS 18)

INCOME TAXES

The major components of tax expenses (income) shall be disclosed

separately. Components of tax expense (income) may include:
a. current tax expense;
b. any adjustments recognized in the period for current tax of prior
periods;
c. the amount of deferred tax expense (income) relating to the
origination and reversal of temporary differences;
d. the amount of deferred tax expenses (income) relating to the changes
in tax rater or the imposition of new taxes;
e. the amount of benefit arising from the previously unrecognized tax
loss, tax credit or temporary difference of a prior period that is used
to reduce current tax expenses;

The major components of tax expenses (income) shall be disclosed

f. the amount of the benefit from a previously unrecognized tax loss,
credit or temporary difference of a prior period that is used to
reduce deferred tax expenses;
g. deferred tax expense arising from the write-down, or reversal of a
previous write- down, of a deferred tax asset; and
h. the amount of tax expense (income) relating to those changes in
accounting policies and errors that are included in income or loss
because they cannot be accounted fro retrospectively. (Paragraphs
79,8o, PAS 12)

The following shall also be disclosed separately:

a. the aggregate current and deferred tax relating to items that are
charged or credited to equity;
b. an explanation of the relationship between tax expense (income)
and accounting income in either or both of the following forms:

A numerical reconciliation between tax expense (income) and the product

of accounting income multiplied by the applicable tax rates, disclosing
also the basis on which the applicable tax rates are computed, or
A numerical reconciliation between the average effective tax rate and the
applicable tax rate, disclosing also the basis on which the applicable tax
rate is computed;

c. an explanation of changes in the applicable tax rates compared to

the previous accounting period;
d. the amount and expiry date, if any, of deductible temporary
differences, unused tax losses, and unused tax credits for which no
deferred tax assets is recognized in the balance sheet;

The following shall also be disclosed separately:

e.

the aggregate amount of temporary differences associated with

investments in subsidiaries, branches and associates and interest in
joint ventures, for which deferred tax liabilities have been
recognized;

f.

in respect of each type of temporary difference, and in respect of

each type of unused tax losses and unused tax credits:

The amount of the deferred tax assets and liabilities recognized in the
balance sheet for each period presented;
The amount of the deferred tax income or expenses recognized in the
statement of comprehensive income, if this is not apparent from the
changes in the amounts recognized in the statement of financial position.

The following shall also be disclosed separately:

g. in respect of discontinued operations, the tax expense relating to:

The gain or loss on discontinuance; and

The income or loss from the ordinary activities of the discontinued
operation for the period, together with the corresponding amounts for
each prior period presented; and

h. the amount of income tax consequences of dividends to

shareholders of the entity that were proposed or declared before
the financial statements were authorized for issue, but not
recognized as a liability in the financial statements. (Paragraph 81,
PAS 12)

An entity shall also disclose the amount of a deferred tax assets

and the nature of the evidence supporting its recognition, when:
a. the utilization of the deferred tax asset is dependent on future
taxable income in excess of the profits arising from the reversal of
existing taxable temporary differences; and
b. the entity has suffered a loss in either the current or preceding
period in the tax jurisdiction to which the deferred tax asset relates.
(Paragraph 82, PAS 12)
In the circumstances described in items a and b, an entity shall
disclose the nature of the potential income tax consequences that
would result from the payment of dividends to its shareholders. In
addition, the entity shall disclose the amounts of the potential income
tax consequences practically determinable and whether there are any
potential income tax consequences not practically determinable.
(Paragraph 82A, PAS 12)

EARNINGS PER
SHARE
(EPS)

An entity shall disclose the following:

a. the amounts used as the numerators in calculating basic and diluted
earnings per share, and reconciliation of those amounts to profit or
loss attributable to the parent entity for the period. The
reconciliation shall include the individual effect of each class of
instruments that affects earnings per share.
b. the weighted average number of ordinary shares used as the
denominator in calculating basic and diluted earnings per share,
and a reconciliation of these denominators to each others. The
reconciliation shall include the individual effect of each class of
instruments that affects earnings per share.

An entity shall disclose the following:

c. instruments (including contingently issuable shares) that could
potentially dilute basic earnings per share in the future, but were not
included in the calculation of diluted earnings per share because they
are antidiluted for the period(s) presented.
d. a description of ordinary shares transactions or potential ordinary
share transactions, other than those accounted retrospectively, that
occur after the balance sheet date and that would have changed
significantly the number of ordinary shares or potential ordinary
shares outstanding at the end of the period if those transactions have
occurred be.

PROVISIONS,
CONTINGENT,
LIABILITIES AND
CONTINGENT ASSETS

For each class of provision, an entity shall disclose:

a. the carrying amount at the beginning and end of the period;
b. additional provisions made in the period, including increases to
existing provisions;
c. amounts used (i.e., incurred and charge against the provision)
during the period;
d. unused amounts reversed during the period; and
e. the increase during the period in the discounted amount arising
from the passage of time and effect of any change in the discount
rate.
Comparative information is not required. (Paragraph 84, PAS 37)

An entity shall disclose the following for each class of provision:

a. a brief description of the nature of the obligation and the
expected timing of any resulting outflows of economic
benefits;
b. an indication of the uncertainties about the amount or timing
of those outflows. Where necessary to provide adequate
information, an entity shall disclose the major assumptions
made concerning future events;
c. the amount of any expected reimbursement, starting the
amount of any asset that has been recognized for that
expected reimbursement. (Paragraph 85, PAS 37)

Unless the possibility of any outflow in settlement is remote,

an entity shall disclose for each class of contingent liability at the
balance sheet date a brief description of the nature of the
contingent liability, where practicable:
a. an estimate of its financial effect;
b. an indication of the uncertainties relating to the amount or
timing of any outflow; and
c. the possibility of any reimbursement. (Paragraph 85, PAS 37)

Where an inflow of economic benefits is probable, an entity shall

disclose a brief description of the nature of the contingent assets at the
balance sheet date, and, where practicable, an estimate of their financial
effect, measured using the principles set out for provisions in paragraph
36-52 of PAS 37. (Paragraph 89, PAS 37)
In extremely rare cases, disclosure of some or all of the information
required can be expected to prejudice seriously the position of the entity
in a dispute with other parties on the subject matter of the provision,
contingent liability or contingent asset. In such cases, an entity needs not
disclose the information, but shall disclose general nature of the dispute,
together with the fact that, and reason why, the information has not been
disclosed. (Paragraph 92, PAS 37)

PARTY
DISCLOSURES

Relationships between parents and subsidiaries shall be disclosed

irrespective of whether there have been transactions between those
related parties. An entity shall disclose the name of the entitys parent
and, if different, the ultimate controlling party. If neither the entitys
parent nor the ultimate controlling party, produces financial statements
available for public use, the name of the next most senior parent that
does so shall also be disclosed. (Paragraph 12, PAS 24)
An entity shall disclose key management personnel compensation in
total and for each of the following categories:
a. short-term employee benefits;
b. post-employment benefits;
c. other long-term benefits
d. termination benefits; and
e. share-based payments. (Paragraph 16, PAS 24)

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 potential effect of the relationship on the financial
statements.
These disclosure requirements are in addition to the requirements in
paragraph 16 of PAS 24 to disclose key management personnel
compensation. At a minimum, disclosure shall include:
a. the amount of the transactions;
b. the amount of outstanding balances; and

their terms and conditions, including whether they are secured, and the nature
of the consideration to be provided in settlements; and
details of any guarantees given or received;

c. provisions for doubtful debts related to the amount of outstanding

balances; and

d. the expense recognized during the period in respect of bad or

doubtful debts due from related parties. (Paragraph 17, PAS 24)
The disclosures required by paragraph 17 shall be made
separately for each of the following categories:
a. the parent;
b. entitles with joint control or significant influence over the entity;
c. subsidiaries;
d. associates;
e. joint ventures in which the entity is a venturer;
f. key management personnel of the entity or its parent; and
g. other related parties. (Paragraph 18, PAS 24)

IMPAIRMENT OF
ASSETS

An entity shall disclose the following for each class of assets:

a. the amount of impairment losses recognized in profit or loss during
the period and the line item(s) of the income statement in which
those impairment losses are included.
b. the amount of reversals of impairment losses recognized in profit or
loss during the period and the line item(s) of the income statement
in which those impairment losses are reversed.
c. the amount of impairment losses on revalued assets recognized
directly in equity during the period.
d. the amount of reversals of impairment losses on revalued assets
recognized directly in equity during the period. (Paragraph 126,
PAS 36)

An entity shall disclose the following for each material impairment

loss recognized or reversed during the period for an individual asset,
including goodwill, or cash-generating unit:
a. the events and circumstances that led to the recognition or reversal
of the impairment loss.
b. the amount of the impairment loss recognized or reversed.
c. for an individual asset:

the nature of the assets; and

if the entity reports segment information, the reportable segment to which
the asset belongs based on the entitys primary reporting format.

d. for a cash generating unit:

a description of the cash generating unit (such as whether it is a product

line, a plant, a business operation, a geographical area, a reportable
segment);

the amount of the impairment loss recognized or reversed by a class

assets and, if the entity reports segment information, by reportable
segment based on the entitys primary reporting format; and

if the aggregation of assets for identifying the cash-generating unit has

changed since the previous estimate of the cash-generating units
recoverable amount (if any), a description of the current and former way
of aggregating assets and the reasons for changing the way the cashgenerating unit is identified.

e. whether the recoverable amount of the assets (cash-generating

unit) is its fair value less costs to sell or its value in use.
f. if recoverable amount is fair value less cost to sell, the basis used
to determine fair value less costs to sell (such as whether fair
value was determined by reference to an active market).
g. if recoverable amount is value in use, the discount rate(s) used in
the current estimate and previous estimate (if any) of value in
use. (Paragraph 130, PAS 36)

An entity shall disclose the following information for the

aggregate impairment losses and the aggregate reversals of
impairment losses recognized during the period for which no
information is disclosed:
a. the main classes of assets affected by impairment losses and the
main classes of assets affected by reversals of impairment losses.
b. the main events and circumstances that led to the recognition of
these impairment losses and reversals of impairment losses.
(Paragraph 131, PAS 36)
If any portion of the goodwill acquired in a business combination
during the period has not been allocated to cash-generating unit
(group of units) at the reporting date, the amount of the unallocated
goodwill shall be disclosed together with the reas0ns why that
amount remains unallocated. (Paragraph 133, PAS 36)