Notes To Financial Statements Template

NOTES TO FINANCIAL STATEMENTS
1. Reporting entity
MR. EDDI B. VIERNES JR is engaged in providing transport, construction services and general
merchandise under the trade names GAWIS TRANSPORT AND SHUTTLE SEVICES, NAPAKEY
CONSTRUCTION AND SUPPLY and JRBEN GENERAL MERCHANDISE, respectively. The Company’s
registered address is at 61 Purok Sadjo, Loakan Poper, Baguio City. The Tax Identification of the
company is 928-862-369.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting
The accompanying financial statements have been prepared in accordance with the Financial
Reporting Standards for Small- and Medium-Sized Entities. The accounting principles that compose the
PFRS for SMEs are appropriate for the preparation and presentation of small- and medium-sized
entity financial statements, based on the needs of the financial statement users and cost and
benefit considerations.
The financial statements were prepared on a going concern basis and the accrual basis.
Statement of Compliance
The accompanying financial statements have been prepared in accordance with Philippine Financial
Reporting Standards for Small and Medium sized Entities (PFRS for SMEs).
Accounting policies Adopted

Statement of Assets, Liabilities, and Equity Classification
Assets and Liabilities are classified as current and non-current following the guidelines under Philippine
Accounting Standard (PAS) 1. The entity does not recognize deferred tax assets and liabilities as it does
not comply with the full PFRS, and there are no transactions resulting to temporary differences in
financial and tax reporting of revenue and expenses.
Cash
The entity holds cash on hand and in bank that are not restricted for use. The company does not
recognize cash equivalents as it does not hold short-term and highly liquid securities that may be
classified as cash equivalents.
Accounts Receivable
Accounts receivables are collectibles arising from credit sale of goods/ services to customers/ clients due
within one year. The direct write-off method of recognizing bad debts or uncollectible accounts is used,
which is also consistent with tax reporting.
Inventory
Inventories are goods held for sale in the ordinary course of business, in the form of materials or
supplies used in producing goods for sale, or in the process of being processed to become finished goods
for sale (PAS 2). Work in progress are recognized as inventory for services that are currently being
competed as of the reporting date, in which revenue has not yet been recognized. This account includes
direct and indirect labor, including materials and supplies incurred. Inventories are measured at cost
initially and subsequently, unless there is an indication that the net realizable value of these inventories
are below cost as at the reporting date and therefore inventories are written down to its net realizable
value.
Prepaid Expenses
Advance payment for expenses like rent and supplies expected to be used or consumed within one year
are recognized as current assets under this account. Prepaid expenses are measured at cost and
subsequently adjusted for the portion that has expired or used.
Property and Equipment

Property and equipment are recognized as provided by Philippine Accounting Standard (PAS) 16. These
are tangible assets having useful lives of more than one year and are used in the operation of the
business or as part of the administration of the business. Property, Plant and Equipment are recognized
initially at cost, and subsequently at cost less accumulated depreciation and accumulated impairment
loss (Cost Model). Depreciation is computed primarily using the straight line method over the estimated
useful lives of the assets.
Leasehold improvements are amortized over the shorter of the useful life of the related assets or
the lease term. Expenditures for repairs and maintenance are charged to expense as incurred. For
assets sold or otherwise disposed of, the cost and related accumulated depreciation are removed
from the accounts, and any related gain or loss is reflected in income for the period.
Revenue and Cost Recognition

Revenues are recognized when earned. Advance collections of fees or sales are recognized as current
liability while collectibles for goods or services already delivered are recognized as accounts receivable.
Expenses are recognized as incurred. Incurred expenses that are unpaid are recognized as liabilities
Income Taxes
For financial reporting purposes, the Company has elected to use the taxes payable method.
Under that method, income tax expense represents the amount of income tax the Company
expects to pay based on the Company’s current year taxable income.
Use of Estimates
The preparation of financial statements in conformity with the Financial Reporting Framework for
Small and Medium-Sized Entities requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
3. SUPPORTING NOTES TO LINE ITEMS

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NOTES TO FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting policies Adopted

Property and Equipment

Revenue and Cost Recognition

3. SUPPORTING NOTES TO LINE ITEMS

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