MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2016

1.) CORPORATE INFORMATION

MARBEL EVANGELICAL LEARNING CENTER (MELC), INC. was registered with the Securities
and Exchange Commission (SEC) on November 27, 1998 under SEC registration no. D199801183, as a non-
stock, non-profit corporation which aim to provide quality Christian Education through biblical philosophies and
principles for the development of the childs physical, intellectual, social, moral and spiritual well-being. It is
located at Blk. 1 Callejo Subdivision., Bo. 1 (GPS), City of Koronadal, South Cotabato, Philippines.

The financial statements for the year were approved by the Board of Trustees and authorized for issue
on March 24, 2017.

2.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation
The financial statements have been prepared under the historical cost basis and presented in Philippine
peso which is the Companys functional currency.

The accompanying financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and settlement of liabilities in the normal course of business.

Statement of Compliance
The accompanying financial statements have been prepared in accordance with the Philippine Financial
Reporting Standards for Small and Medium Sized Entities (PFRS for SMEs) approved for adoption by the
Philippine Financial Reporting Standards Council on October 13, 2009 and by the SEC on December 3,
2009. The PFRS for SMEs is effective for annual periods beginning on or after January 1, 2010, and is
required to be used by entities that meet the definition of an SME, which include among others, an entity
with total assets of between P3.0 million and P350.0 million or total liabilities of between P3.0 million and
P250.0 million. Though the company did not qualify in the size criteria prescribed by SEC, the Company is a
micro-business and as such has the option to use PFRS for SMEs in the preparation of its financial
statements.
The PFRS for SME is a self-contained standard that is tailored for the needs and capabilities of smaller
businesses. Many of the principles in full PFRS for recognizing and measuring assets, liabilities, income
and expenses have been simplified, topics not relevant to SMEs have been omitted and the number
required disclosures have been significantly reduced.
PFRS for SMEs consists of 35 sections that cover all of the recognition, measurement, presentation and
disclosure requirements for SMEs based on the fundamental principles of full PFRS. The following sections
were adopted by the company:
Section 3 - Financial Statement Presentation
Section 4 - Statement of Financial Position
Section 5 - Statement of Comprehensive Income and Income Statement
Section 6 - Statement of Changes in Equity
Section 7 - Statement of Cash Flows
Section 8 - Notes to Financial Statements
Section 10 - Accounting Policies, Statement s and Errors
Section 11 - Basic Financial Instruments
Section 12 - Other Financial Instruments
Section 13 - Inventories
Section 17 - Property and Equipment
Section 20 - Leases

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

Section 21 - Provisions and Contingencies

Section 22 - Liabilities and Equity
Section 23 - Revenue
Section 25 - Borrowing Cost
Section 27 - Impairment of Assets
Section 28 - Employees Benefit
Section 29 - Income Tax
Section 32 - Events after the End of the Reporting Period
Section 33 - Related Party Disclosures
Section 35 - Transition to PFRS for SMEs

The Company first adopted the above sections in 2010, particularly Section 35. The Company will
continue to adopt the same unless otherwise stated.

Revenue Recognition
Revenue is recognized to the extent that it is probable that the revenue can be reliably measured; it is
probable that the economic benefits will flow to the Company; and the costs incurred or to be incurred can
be measured reliably. In addition, the following specific recognition criteria must also be met before revenue
is recognized:

(a.) Revenue in this financial statement represents tuition fees, miscellaneous fees, summer fees and other
school fees.

(b) Rendering of Services - Revenue from rendering of services is recognized when services are rendered.

(c) Interest - Revenue is recognized as interest accrues taking into accounts the effective yield of the asset.

Expenses
Expenses are decreases in economic benefits during the accounting period in the form of outflows or
depletions of assets or incurrence of liabilities that result in decreases in equity, other than those relating to
distributions to equity participants. Operating expenses are generally recognized when the services are
used or the expense incurred while interest expense, if applicable, is accrued as incurred in the appropriate
period.

Cash and Cash Equivalents

Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that
are readily convertible to known amounts of cash with original maturities of three months or less and are
subject to insignificant risk of changes in value.

Receivables
School fees are billed on a monthly basis, and the receivables do not bear interest. Where receivable is
extended beyond normal paying period, receivables are measured at amortized cost using the effective
interest method. At the end of each reporting period, the carrying amounts of receivables are reviewed to
determine whether there is any objective evidence that the amounts are not recoverable. If so, an
impairment loss is recognized immediately in profit or loss.

Property, Plant and Equipment

Property, plant and equipment, except for land, are stated at cost less accumulated depreciation and
any impairment in value. The initial cost of property and equipment consists of its purchase price, including
import duties, taxes and any directly attributable costs of bringing the asset to its working condition and
location for its intended use. Expenditures incurred after the property, plant and equipment have been put

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

into operation, such as maintenance and repairs, are normally charged to income in the period in which the
costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in
an increase in the future economic benefits expected to be obtained from the use of an item of property,
plant and equipment beyond its originally assessed standard of performance, the expenditures are
capitalized as an additional cost of property, plant and equipment.
Depreciation and amortization are computed on a straight-line basis over the following estimated useful
lives of the assets or the term of the lease, in case of leasehold improvements, whichever is shorter.
Property and equipment has the following estimated useful lives:

Useful Life
Building 20
Furniture and fixture 5
Office and church equipment 5

The useful lives and depreciation and amortization method are reviewed periodically to ensure that the
periods and method of depreciation and amortization are consistent with the expected pattern of economic
benefits from items of property and equipment.

When assets are retired or otherwise disposed of, their cost, accumulated depreciation and amortization
and any allowance for impairment loss are eliminated from the accounts and any gain or loss resulting from
their disposal is included in the Companys statement of income.

Financial Instruments

a. Financial Assets at FVPL

A financial asset is classified in this category if acquired principally for the purpose of selling or
repurchasing in the near term or upon initial recognition, it is designated by the management at FVPL.
Derivatives are also categorized as held at FVPL, except those derivatives designated and considered
as effective hedging instruments. Assets classified under this category are carried at fair value in the
balance sheets. Changes in the fair value of such assets are accounted for immediately in the
statement of income. Financial assets at FVPL are classified as current if they are expected to be
realized within 12 months from the balance sheet date.
The Company has designated its embedded derivatives financial assets at FVPL.

b. Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments and are
not quoted in an active market. Such assets are carried at amortized cost using the effective interest
method. Gains and losses are recognized in income when the loans and receivables are derecognized
or impaired, as well as through the amortization process. Loans and receivables are included in current
assets if maturity is within 12 months from the balance sheet date. Otherwise, these are classified as
non-current assets.

Financial assets classified as advances to employees accounts receivables .

c. HTM Investments

HTM investments are quoted non-derivative financial assets with fixed or determinable payments and
fixed maturities which the Company has the positive intention and ability to hold to maturity. HTM

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

assets are carried at cost or amortized cost in the balance sheets. Amortization is determined using the
effective interest rate method.

The Company has no HTM investments.

d. AFS Financial Assets

AFS financial assets are those nonderivative financial assets that are designated as AFS or are not
classified in any of the three preceding categories. After initial recognition, AFS financial assets are
measured at fair value with gains or losses being recognized as a separate component of equity until
the investment is derecognized or until the investment is determined to be impaired at which time the
cumulative gain or loss previously reported in equity is included in the statements of income. AFS
financial assets are classified as current if they are expected to be realized within 12 months from the
balance sheet date.

The Company has no AFS financial assets.

De recognition of Financial Instruments

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial
assets) is derecognized when:

The rights to receive cash flows from the asset have expired;
The Company retains the right to receive cash flows from the asset, but has assumed an obligation to
pay them in full without material delay to a third party under a pass-through arrangement; or,
The Company has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Company has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the
asset, the asset is recognized to the extent of the Companys continuing involvement in the asset.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the
lower of the original carrying amount of the asset and the maximum amount of consideration that the
Company could be required to repay. Where continuing involvement takes the form of a written and/or
purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of
the Companys continuing involvement is the amount of the transferred asset that the Company may
repurchase, except that in case of a written put option (including a cash-settled option or similar provision)
on an asset measured at fair value, the extent of the Companys continuing involvement is limited to the
lower of the fair value of the transferred asset and the option exercise price.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or
has expired. Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognized in statement of income.

Financial Liabilities

Financial liabilities include interest-bearing loans and borrowings, trade and other payables and finance
liabilities, due to related parties and other non-current liabilities, which are measured at amortized cost using

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

the effective interest rate method. Financial liabilities are recognized when the Company becomes a party to
the contractual terms of the instrument. All interest-related charges are recognized as an expense in the
statement of comprehensive income statement.

Financial liabilities are derecognized from the statement of financial position only when the obligations are
extinguished either through discharge, cancellation or expiration.

Impairment of Assets
An assessment is made at each balance sheet date to determine whether there is objective evidence
that a specific financial asset may be impaired. If such evidence exists, any impairment loss is recognized in
the statements of income. Impairment loss, if any, is determined as follows:

For assets carried at amortized cost such as receivables from customers, impairment loss is based on
the difference between the carrying amount and the estimated cash flows discounted at the original
effective interest rate.

For assets carried at fair value, impairment loss is the difference between acquisition cost (net of any
principal repayment and amortization) and current fair value, less any impairment loss previously
recognized in the statements of income.

For assets carried at cost, impairment loss is the difference between the carrying amount and the
present value of future cash flows discounted at the current market rate of return. Per evaluation of the
companys assets, there is no material impact on the financial statements (such as restatement of
financial statements, revaluation of assets or recognition of impairment (losses).

Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership of the leased asset to the Company All other leases are classified as
operating leases.

Rights to assets held under finance leases are recognized as assets of the Company at the fair value of
the leased property (or, if lower, the present value of minimum lease payments) at the inception of the lease.
The corresponding liability of the lessor is included in the statement of financial position as a finance lease
obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation
so as to achieve.

Finance charges are deducted in measuring profit or loss. Assets held under finance leases are
included in property, plant and equipment and depreciated and assessed for impairment losses in the same
way as owned assets.

Income Taxes
Current Income Tax
Current tax liabilities for the current period are measured at the amount expected to be paid to tax
authority. The tax rates and tax laws used to compute the amount are those that have been enacted or
substantively enacted as of balance sheet date.

Deferred Income Tax

Deferred income tax is provided, using the balance sheet liability method, on all temporary differences
at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

financial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary
differences. Deferred income tax assets are recognized for all deductible temporary differences and carry
forward of unused net operating loss carry over (NOLCO), to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences and carry forward of unused NOLCO
can be utilized.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax assets to be utilized. Unrealized deferred income tax assets are reassessed
at each balance sheet date and are recognized to the extent that it has become probable that future taxable
profit will allow the deferred income tax assets to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the balance sheet date.

Trade Payables
Trade payables are obligations on the basis of normal credit terms and do not bear interest. Trade
payables denominated in a foreign currency are translated into Philippine Peso (PhP) using the exchange
rate at the reporting date. Foreign exchange gains or losses are included in other income or other expenses

Borrowing cost
All borrowing costs are recognized in profit or loss in the period in which they are incurred.

Employee Benefits
Employee benefits are all forms of considerations given by an entity in exchange for service rendered
by employees including directors and management. The Company provides its employees with short term
employee benefits such as salaries and wages, meal allowance, fuel allowance, SSS, PHIC and Pag-ibig
contributions. Employee benefits are recognized when an employee has rendered service to the corporation
during the accounting period.

Related Parties
Parties are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions. This include (a)
enterprises that directly, or indirectly through one or more intermediaries, control or are controlled by, or are
under common control with, the Company; (b) associates; and (c) individuals owning, directly or indirectly,
an interest in the voting power of the Company that gives them significant influence over the Company and
close members of the family of any such individual. There was no related party transaction during the year.

Provisions
Provisions are recognized when the Company has a present obligation (legal and constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the
effect of the time value of money is material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessment of the time value of money and, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to
the passage of time is recognized as an interest expense.

Contingencies

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

Contingent liabilities are not recognized in the financial statements. These are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not
recognized in the financial statements but disclosed when an inflow of economic benefits is probable.

Use of Judgments and Estimates

The preparation of the Companys financial statements in Philippine Financial Reporting Standards for
SMEs requires management to make judgments, estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities. The estimates and assumptions used in the financial
statements are based upon managements evaluation of the relevant facts and circumstances as of the date
of the Companys financial statements. Actual results could differ from such estimates.

Estimating Useful Lives of Property and Equipment.

The Company estimates the useful lives of property and equipment based on the economic lives of
property and equipment. The estimated useful lives of property and equipment are reviewed periodically
and updated if expectations differ materially from previous estimates due to physical wear and tear, technical
or commercial obsolescence and legal or other limits on the use of the property and equipment. However, it
is possible that future results or operations could be materially affected by changes in the estimates brought
about by changes in factors mentioned above. The amounts and timing of recording of expenses for any
period would be affected by changes in these factors and circumstances. A reduction in the estimated useful
lives of the property and equipment would increase the recorded expenses and decrease the non-current
assets.

Estimating Impairment Losses on Receivables

The Company maintains allowance for impairment losses at a level considered adequate to provide for
potential uncollectible receivables. This amount is evaluated based on such factors that affect the
collectability of the accounts. These factors include the age of the receivables, the length of the Companys
relationship with the customer, the customers payment behavior and known market factors. The amount and
timing of recorded expenses for any period would differ if the Company made different judgments or utilized
different estimates. An increase in allowance for impairment losses would increase the recorded operating
expenses and decrease current assets.

Events After Balance Sheet Date

Post year-end events that provide additional information about the Companys position at the balance
sheet date (adjusting events) are reflected in the financial statements. Post year-end events that are not
adjusting events are disclosed in the notes to the financial statements when material.

3.) CASH AND CASH EQUIVALENTS

This refers to cash in bank balance for the years December 31, 2016 and 2015 amounting to P
592,419.52 and P 393,845.48 respectively. Cash in banks earn interest at the respective bank deposit rates.

Interest income from cash in banks amounted to in P 2356.30 in 2015.

4.)ADVANCES TO EMPLOYEES
This refers to the advances to various employees deductible from their salaries.

5.) ACCOUNTS RECEIVABLE

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 MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

This refers to accounts receivable from members.

6.) PROPERTY AND EQUIPMENT

This is composed of the following:

For the year 2016

Furniture & Office Total
Building Fixtures Equipment
Acquisition Cost
Beginning Balance 4,694,419.43 228,412.00 865,548.41 5,788,379.84
Additions - 7,200.00 7,200.00

Retirement -
Ending Balance 4,694,419.43 235,612.00 865,548.41 5,795,579.84

Accumulated
Depreciation
Beginning Balance 2,576,454.78 210,398.10 658,877.78 3,445,730.66
Depreciation & Amortization 469,441.94 6,732.00 65,666.20 541,840.14
Ending Balance 3,045,896.72 217,130.10 724,543.98 3,987,570.80

1,648,522. 18,481. 141,004. 1,808,009.

Net Book Value 71 90 43 04

For the year 201 5

Furniture & Office Total
Building Fixtures Equipment
Acquisition Cost
Beginning 4,694,419.4 221,083.0 737,610.4 5,653,112.8
Balance 3 0 1 4
7,329.0 127,938.0 135,267.0
Additions - 0 0 0
Retirement -
4,694,419.4 228,412.0 865,548.4 5,788,379.8
Ending Balance 3 0 1 4

Accumulated Depreciation
Beginning 2,107,012.8 204,765.4 607,599.1 2,919,377.4
Balance 4 5 8 7
469,441.9 5,632.6 51,278.6 526,353.1
Depreciation & Amortization 4 5 0 9
Ending Balance 2,576,454.7 210,398.1 658,877.7 3,445,730.6

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

8 0 8 6

2,117,964 18,013 206,670 2,342,649

Net Book Value .65 .90 .63 .18

7.) TRADE AND OTHER PAYABLES

Breakdown is as follows.
Trade and Other payable
This consist of the following:
2016 2015
Other payables P 295,328.27 P 295,328.27
Retirement benefits payable 69,562.00 69,562.00
HDMF loan payable 45,492.27 435.00
SSS - Sickness Reimbursement 29,400.00 29,400.00
Staff Medical Insurance(Maxicare) 17,118.93 17,118.93

SSS Premium payable 16,722.00

Total P 473,623.47 P 411,844.20

Trade and other payable refer to the supplier of materials on the on-going repairs of the school and
payable to Marbel Evangelical Learning Center, Inc. a non- interest bearing.

8.) EQUITY

Please refer to Statement of Changes in Equity.

2016 2015
Members' Equity P 239,000.00 P 239,000.00
Fund Balance 2,169,893.02 2,288,297.51
2,408,893. 2,527,297
Total P 02 P .51

9.) REVENUES

This consists of the following:

2016 2015
Tuition fee P 1,951,424.00 P 1,555,392.20
Miscellaneous fee 1,285,945.00 850,510.00

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

Summer fee 228,902.00 89,529.00

Books 157,550.00 147,048.70
Other revenue 56,196.00
4,175.0
Accomodation / ticket 0
3,684,192. 2,642,479.
Total P 00 P 90

10.) OPERATING AND ADMINISTRATIVE EXPENSES

This is composed of the following:

2016 2015
Salaries and Wages P 1,271,458.72 P 968,700.74
Depreciation 6 541,840.14 526,353.19
Employees' benefits 14 489,757.39 425,838.43
Communication , light, power & water 218,634.49 226,631.79
Miscellaneous 202,758.84 32,578.29
Office and cleaning Supplies 161,647.74 47,228.40
Students' welfare expense 13 141,145.22 75,588.80
Repairs and maintenance 128,712.23 281,296.07
General service expense 60,225.00 69,665.70
Love Offerings 52,438.00 123,707.90
Taxes and Licenses 14 253,808.22 8,471.00
Other Expense 366,471.22
Professional fee 23,005.56 -
Trainings and seminar 32,993.00 37,573.00
Representation 10410.5 26,424.80
Transportation and travel 18,172.55 14,416.50
Photocopying 302.00 2,659.00
Interest Expense 37,083.33
Donation/tithes/offerings 2,728.85
3,973,780.8 2,906,945.
Total P 2 P 79

11.) OTHER INCOME / (EXPENSE)

This is composed of the following:

2016 2015
Bank Charges (200.00) (1,471.24)
Interest Income P P 2,356.30

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

Other expense (6,123.34)

(200. (5,238.
Total P 00) P 28)

12.) STUDENTS WELFARE SUPPORT

This is composed of the following:

2016 2015
5,500.9
Graduation/Recognition 64,680.25 5
School Activities / Recognition 51,814.37 27,145.90
ID/Insurance 23,200.00 29,025.00
1,290.9
Prizes & Motivation 1,238.00 5
PE Uniforms 212.60 12,626.00
141,145. 75,588
Total P 22 P .80

13.) EMPLOYEES BENEFITS

Breakdown is as follows.
2016 2015
SSS/PHIC/HDMF Premium P 148,155.10 P 95,718.30
Rice Allowance 102,600.00 100,650.00
13th month pay 75,008.10 83,831.60
Christmas cash gift 63,000.00 20,700.00
COLA 53,700.44 95,825.33
5,019.7
Uniforms 31,519.25 5
Other benefits 15,774.50
Retirement benefits 24,093.45
489,757. 425,838.
Total P 39 P 43

14.) SUPPLEMENTARY INFORMATION REQUIRED UNDER REVENUE REGULATION 15-2010

In compliance with the requirements set forth by RA 15-2010 hereunder is the information on taxes &
licenses fees paid or accrued during the taxable year:

a. The company is a non-stock, non-profit corporation under the law of the Republic of the Philippines.
b. On other Local and National Taxes:

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MARBEL EVANGELICAL LEARNING CENTER (MELC), INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2016

Local 2016 2015

5,741
Business permit P 6,441.00 P .00
2,000.0
Dep Ed permit 2,000.00 0
7,741.0
8,441.00 0
National
BIR registration fee 500.00 500.00
Documentary stamp 230.00 230.00
9,171. 8,471
Total P 00 P .00

c. On Withholding Taxes
a. Total payment of withholding taxes on salaries amounted to P 42,637.43.
b. Total payment on withholding taxes on expanded amounted to P758.51.

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