Professional Documents
Culture Documents
Multiply by 1/3
Each Joint operator’s equal share P 66,667
Less JJJ’s unrealized gain as of 1/01/17
(P15,000 * 1/3) 5,000
Same amount (if computed at cost to JJJ:
(P185,000 * 1/3) P 61,667
Equipment per books of Joint Operation, 1/1/17 P200,000
Accumulated depreciation (200,000/ 10) 20,000
Equipment per books of the JO, 12/31/17 P 180,000
Multiply by 1/3
Each joint operator’s equal share P 60,000
Less JJJ’s unrealized gain as of 12/31/17 4,500
(P5,000 * 90%)
Same amount (if P185,000 * 90%) * 1/3 P55,500
(P 180,000 * 1/3) P60,000
Equipment per books of Joint Operation, 1/1/17 (FV) P200,000
Multiply by 1/3
Equipment in JO in BS of each operator, 1/1/17 P 66,667
52,750 52,250
Cash on Hand
57,000- 3,000 54,000
54,900- 3,900 51,000
Cash (Paid)/ Received (1,250) 1,250
17. C
Estimated cash available (56,800 + 10,000 + 8,960) P 75,760
Less: Prioritized claims:
Fully-secured liabilities 55,200
Partially-secured liabilities (Secured Portion) 10,000
Unsecured with Priority 2,400 67,600
Est amount available to unsecured liab w/o priority P 8,160
Less: Unsecured Amounts:
Partially-secured liabilities (Unsecured Portion) 6,000
Unsecured w/o priority: 14,400 20,400
Estimated deficiency to unsecured creditors w/o priority P (12,240)
Estimated recovery rate (ERR): 8,160/ 20,400 40%
REVENUE
Int Bearing Note GPR:Revenue NIB Note
Int Bearing Note NIB Note Contract Price (Cost) DP + PV of Note
GP / Revenue
Contract Price CP- UI
DP + FA of Note DP + PV of Note DP + Inst Pymt Collection DP +(Inst Pymt –
Discount)
Int= FA of Note * IR
Disc= PV of Note * DR
FR-IFF (P420,000 + P1,098,000*) P1,518,000
FR – CFF (P360,000 x 3%) 10,800
Interest revenue (P1,098,000 x 24%) 263,520
Franchise Cost ( 333,960)
Expense ( 56,400)
REVENUE
Int Bearing Note GPR:Revenue NIB Note
Int Bearing Note NIB Note Contract Price (Cost) DP + PV of Note
GP / Revenue
Contract Price CP- UI
DP + FA of Note DP + PV of Note DP + Inst Pymt Collection DP +(Inst Pymt –
Discount)
Int= FA of Note * IR
Disc= PV of Note * DR
Franchise revenue –IFF P2,250,000
Less Franchise cost 333,960
Gross profit P1,916,040
Gross profit rate 85.16%
S1 S2
Direct Interest of Parent 80% 60%
Indirect Interest of UP 48% 80% * 60%
NCI 20% 52%
Att. To Parent 320,000 + (76,000 * 80%)+ (56,000 * 48%) = 407,680
Att. To NCI S1 76,000 * 20% = 15,200
S2 56,000 * 52% = 29,120
Date of transaction (2017) P 78,000
Date of settlement (2017) ( FC 97,500 x P0.78) 76,050
Forex loss P 1,950
FC * P 0.80 = P 78,000
FC = 97,500
Cash P 76,050
Forex loss 1,950
Accounts Receivable P 78,000
Contract Receivable (Php) P 149,600
Contract Payable (FC) P 149,600
OR FV on BSD 36,000
Less: FV on DOS 28,000
Loss in 2018 8,000
Agreed forward rate P0.42
Current forward rate .38
Decrease in forward rate P0.04 * P 1,000,000 = P 40,000
Multiply by PV of 0.9803 = P39,212
liability
This forward contract is a derivative financial instrument.
It does not have a fair value at Inception. The change at
December 31 was negative, and the value derived is a
liability. It is because this is a purchase forward contract
and the decrease in pesos over the FCR represents a loss.
Changes in the fair values of a forward
contract after inception date
Current FR is MORE than Current FR is LESS than
Contracted Forward Rate (FR) Contracted Forward Rate (FR)
(the Peso weakens) (the Peso strengthens)
Sales Value
Products @SOP Percent Joint Cost
W P 80,000 80 P 64,000
X 60,000 80 48,000
Y 40,000 80 32,000
Z 20,000 80 16,000
Totals P200,000 P160,000
Products Sales @ FB APC NRV Joint Cost
Budget Accountability
◦ This aspect focuses tracking, monitoring and evaluation of
expenditures and performance. This is simply achieved by
comparing performance with predetermined plans.
Appropriation
is the authorization made by a legislative body to allocate funds for
purposes specified by the legislative or similar authority.
Allotment
is an authorization issued by the DBM to NGAs to incur obligations for
specified amounts contained in a legislative appropriation in the form of
budget release documents. It is also referred to as Obligational Authority.
Notice of Cash Allocation (NCA)
authority issued by the DBM to central, regional and provincial offices and
operating units to cover the cash requirements of the agencies;
Obligation
It refers to the commitment by a government agency arising from an act of
a duly authorized official which binds the government to the immediate or
eventual payments of a sum of money.
Commission on Audit (COA) - shall have the exclusive authority to do
audit and examination, establish audit techniques, implement
accounting rules and regulations, that includes disallowances on the
use of government funds and properties.
Department of Budget and Management (DBM) – is the department
responsible for the planning and implementation of the National
Budget for the sound utilization of government funds in achieving the
national government’s agenda on reform and growth. The DBM is
tasked to monitor all government allotments and appropriations
through maintenance of registries for better control and monitoring.
Bureau of Treasury (BTs) - the department is the keeper of national
funds and disbursements. It is the lead agency in monitoring
transactions affecting the national government, agencies, and other
instrumentalities. It maintains the registry on the releases by the DBM,
as well as the bank transfers between agencies.
Government Agencies – would include government instrumentalities
like bureaus, Congress, Judiciary, constitutional bodies and self
contained institutions, among others, which are required to have an
accounting division, which are of equal level with that of other
agencies that are tasked to do maintenance of accounts and submit
financial statements on a regular basis.
1. Accrual Accounting.
A modified accrual basis of accounting shall be used. Under this method, all
expenses shall be recognized when incurred and reported in the financial
statements in the period to which they relate. Income shall be on accrual basis
except for transactions where accrual basis is impractical or when other methods
are required by law.
4. Books of Accounts.
Regular Agency (RA) Books. These shall be used to record the receipt and
utilization of Notice of Cash Allocation (NCA) and other income/receipts
which the agencies are authorized to use and to deposit with Authorized
Government Depository Bank (AGDB) and the National Treasury. These
shall consist of journals and ledgers, as follows:
Journals
◦ Cash Receipts Journal (CRJ)
◦ Cash Disbursements Journal (CDJ)
◦ Check Disbursements Journal (CkDJ)
◦ General Journal (GJ)
Ledgers
◦ General Ledger (GL)
◦ Subsidiary Ledgers (SL)
National Government (NG) Books. These shall be used to record
income which the agencies are not authorized to use and are required
to be remitted to the National Treasury. These shall consist of:
Balance Sheet
8. Notice of Cash Allocation (NCA). The receipt of NCA by the agency shall
be recorded in the books as debit to account “Cash-National Treasury,
Modified Disbursement System (MDS)” and credit to account “Subsidy
Income from N
9. Financial Expenses. Financial expenses such as bank charges,
interest expenses, commitment charges and other related expenses
shall be separately classified from Maintenance and Other Operating
Expenses (MOOE).
10.Perpetual Inventory of Supplies and Materials. Supplies and
materials purchased for inventory purpose shall be recorded using
the perpetual inventory system. Regular purchases shall be coursed
thru the inventory account and issuances thereof shall be recorded as
they take place except those purchased out of Petty Cash Fund which
shall be charged directly to the appropriate expense accounts.
11.Valuation of Inventory. Cost of ending inventory of supplies and
materials shall be computed using the moving average method.
2. The notice of cash allocation (NCA) received by the agency from DBM is journalized in
the regular agency books. (The other set of books of an agency is the National
Government books (NG).
3. The obligations incurred by the agency are not journalized, but posted to the
appropriate registry, as follows:
For capital outlay - RAOCO
Personal Services - RAOPS
Maintenance & Others - RAOMO
Financial expenses - RAOFE
4. Generally, withheld taxes by the agency are no longer remitted to BIR, but retained and
credited to Subsidy Income from NG under the Tax Remittance Advice (TRA) System.
The NCA released to the agency is reduced by the amount of estimated withholding
taxes pertinent to the allotment covered by the cash allocation.
5. Asset/perpetual inventory method will be followed in the recording of
expenditures if it applies to more than one period or when payment is for
materials for stock. The expense is taken up when the items are
consumed.
8. Constructed Public Infrastructures are not shown among the fixed assets
on the balance sheet, rather they are deducted from government equity
(as part of closing entries) and transferred out to an appropriate registry.
They are not subject to depreciation charges.
9. Depreciation on fixed assets are taken up on the month following the month
of purchase or completion of construction. A 10% scrap value on the asset is
always assumed and the estimated life is prescribed by COA.
10.Income for which the agency is authorized to use for its operation is
recorded in the regular agency books. If the authority is with limitations,
such as any excess is to be remitted to the National Treasury the collections
shall first be recorded in the regular agency books, the expenses journalized,
and the excess is to be remitted to the National Treasury and recorded in the
agency’s NG books.
2. Close the balance of the Subsidy Income from National Government to Income
& Expense Summary Account.
3. Close the balance of all revenue accounts to Income & Expense Summary
Account.
6. Contributed services which would be purchased if not donated, and which require
(1) performance by a specialist, and (2) enhancement of a non-financial asset, will
be recorded as an increase in both expenses and contributions.
7. GAAP require classification of nonprofit organization’s net assets and revenues,
expenses, gains and losses based on the existence or absence of donor-imposed
restrictions. They require that the amount of each of three classes of net assets be
displayed in a statement of financial position and that the amounts of change in
each such type of net assets be displayed in the statement of activities.
8. A liability (not revenue) is recorded when the reporting entity acts as an agent or
trustee. A recipient of assets who is an agent or trustee has little or no discretion in
determining how the assets transferred will be used. It means the recipient NPO will
not have variance power as to how the net assets received will be disposed, and is
therefore treated as an agency transaction.
9. An entity need not recognize the contributions of works of art and historical artifacts if
the collection is held for public exhibition rather than financial profit, cared for and
preserved, and, if sold, the proceeds are used to acquire other items for collection.
10. Quasi-endowment funds are established by the governing board using unrestricted
net assets. Therefore, the assets in the quasi-endowment would be included in the
unrestricted net assets category, even if the governing board would have imposed use or
time restrictions over it.
11. A transfer of assets with a conditional promise to contribute them shall be accounted
for as a refundable advance (a liability) until the conditions have been substantially met.
The conditions have been substantially met when the possibility that they will not be met
is remote.
12. Expiration of donor-imposed restrictions that simultaneously increase one type of net
assets and decrease another should be reported as reclassifications in the statement of
activities. Reclassifications are reported as “net assets released from restrictions.”
13. All investments in debt securities should be measured at fair value in the statement of
financial position.
15. When a resource provider transfers assets to a nonprofit entity and (1) does not
grant the recipient organization variance power and (2) the recipient organization and the
beneficiaries are not financially interrelated, the recipient entity should record an increase
in assets and liabilities as a result of the donation
16. Contributions from a resource provider is reported as revenue if (1) the recipient entity
is granted variance power by the resource provider or (2) the recipient entity and the
beneficiary are financially interrelated organizations. Variance power means the ability of
the recipient organization to redirect the resources transferred to it by the resource
provider to other beneficiaries.
17. Gifts of long-lived assets, in the absence of donor-imposed restrictions, may adopt a
policy of either (1) treating the donation as restricted support over the remaining
estimated useful life of the asset, or (2) treating the donated asset as unrestricted support
by adopting an accounting policy which does not imply a time restriction on such gifts.
56. B
Not under authority (reclassified as
unrestricted when expended) P100,000
Under authority (initially recognized as
unrestricted) 675,000
Total unrestricted revenues for 2016 P775,000
Amount charged to patients P800,000
Less contractual adjustments 110,000
60. C
Capital stock (P600 + P1,600) P 2,200
Retained earnings 1,400 P 3,600