NAME: SIONG, MARRIEL P.

(BSMA-2)

OTHER REPORTING FRAMEWOKS

FULL PFRS PFRS FOR SME PFRS FOR SE

Financial A statement of changes Same requirement. components of FS:

Statement in equity is required, However, if the only
1. Statement of financial
presenting a changes to the equity
position
reconciliation of equity during the period are a
items between the result of profit or loss, 2. Statement of income
beginning and end of payment of dividends,
the period. correction of prior-period 3. Statement of changes
errors or changes in in equity
accounting policy, a 4. Statement of cash
combined statement of flows
income and retained
earnings can be presented 5. Notes to financial
instead of both a statement statements
of comprehensive income Statement of income and
and a statement of changes changes in equity of SE
in equity can be combined if the
only changes arise
from:

-Profit or loss

-Payment of dividends

-Prior period errors

-Changes in accounting
policy

Other comprehensive
income Small entity
does not recognize
OCI. All items of
income and expense
are

recognized in profit or
loss
Revenue from PFRS 15 requires the Under PFRS for SMEs, The accounting for
contracts with entity to apply revenue is recognized revenue of a small entity
the‘ five-step’ principle based on the principle shall be applied to
 Customers when recognizing of ‘transfer of significant the
revenue from risks and rewards.’ (Section followingtransactions and
contracts with 23) events:
customers namely:
a. Sale of goods.
1. Identify the contract B.Rendering of services.
with the customer
C. Construction contract.
2. Identify the
D. Deposits or
performance
receivables yielding
obligations in the
interest.
contract
E. Dividends from
3. Determine the
investments in shares
transaction price
not accounted using
4. Allocate the equity method.
transaction price to
Revenue recognition:
the performance
obligations a. Probability that the
economic benefits
5. Recognize revenue
associated with the
when (or as) a
transaction will flow to
performance obligation
the entity; and
is satisfied
b. The revenue and
cost can be measured
reliably.

Measurement:- Fair value

of the consideration
received or receivable
using accrual basis.
Investments in Investments in An entity may account of its Investment in associate
Associates and associates are investments in associates or using any one of the
Joint Ventures accounted for using the jointly controlled entities following methods:
equity method.The cost using one of the following :
1. Cost model
of fair value model are
-The cost model
not permitted except in 2. Equity method
separate financial -The equity method
statements. To account
for a jointly controlled -The fair value through
entity,either the profit or loss model
proportionate
consolidation method
or equity method are
 allowed. The cost of fair
value model are not
permitted.
INVENTORIES Definition: Same provision under Same provision under
full PFRS for the nature, full PFRS for nature and
are assets held for
recognition and recognition except for
sale in the ordinary
measurement except for the subsequent
course of business,
the treatment of the measurement of
in the process of
excess of NRV over cost inventories which is
production for such
which is accounted for measured at lower of
sale, or in the form of
as impairment loss. cost or market
materials or supplies to
(Section 13). value(LCM).
be consumed in the
production process or -Market value is
in rendering services. determined as the
probable selling price to
Recognition:
willing buyers at
When the entity reporting date.
controls the asset as
a result of past events,
and It is probable that
future economic
benefits will flow to the
entity.

Measurement: Initial:
Cost Subsequent:
LCNRV
Non-Financial For tangible and The cost model in the only Intangible assets of SMEs
assets and intangible assets, there permitted model. All are measured at cost
Goodwill is an accounting policy intangible assets,including model only. Accounting
choice between the goodwill, are assumes to treatment on certain
cost model and the have finite lives and are items:
revaluation model. amortized.
-All intangible assets of a
Goodwill and other
small entity shall be
intangibles with
considered to have a
indefinite lives are
finite life.
reviewed for
impairment and not -All intangible assets
amortized. including goodwill are
amortized over the useful
life.

-If no reliable estimate of

 the useful life, the useful
life shall be the best
estimate of
management but not
exceeding 10 years
Employee Employee Benefits, Required immediate -The accrual method
Benefits- actuarial gains or losses recognition and splits the (using current salary
Defined Benefit can be recognized expense into different and years of service
Plans immediately or components. The without regard to
amortized into profit or circumstance-driven future changes in salary
loss over the expected approach is and service) is used in
remaining working lives applicable,which means calculating the benefit
of participating that the use of an accrued obligation in accordance
employees. The use of benefit valuation method is with the minimum
an accrued benefit required if the information retirement under R.A
valuation method is that is needed to make 7641 or the Philippine
required for calculating such a calculation is already Retirement Pay Law.
defined benefit available, or if it can be
-No provision for defined
obligations. obtained without undue
benefit plans.
cost or effort. If
not,simplifications are
permitted in which future
salary progression,future
service or possible
mortality during an
employees period of
service are not considered.
Income Taxes A deferred tax asset is A valuation allowance is -A small entity shall
only recognized to the recognized so that the net make an accounting
extent that it is carrying amount of the policy choice using
probable that there will deferred tax asset equals either:
be sufficient future the highest amount that is
a. Taxes payable method
taxable profit to enable more likely than not be
– CUTE only; not required
recovery of the recovered.The net carrying
to recognize DTA or DTL.
deferred tax asset. amount of deferred tax
asset is likely to be the b. Deferred income taxes
There is no specific
same between full PFRS method – CUTE+ DTL -
guidance on uncertain
and PFRS for SME’s. DTA
tax position.
Managements recognizes
In practice,
the effect of the possible
management will
outcomes of a review by
record the liability
the tax authorities. It
measured as either a
 single best estimate or should be measure using
a weighted average the probability-weighted
probability of the average amount of all the
possible outcomes. possible outcomes.
Financial definition: Under PFRS for SME Same provision under
Instruments (Section 11 and 12), PFRS for SME Basic
Is any contract that
Financial Instruments:
gives rise to a financial financial instruments are
asset of one entity and classified into basic 1. Cash
a financial liability or financial instruments and
2. Bank deposits
equity instrument of other financial
another entity. instruments issues (non- 3. Trade receivables and
basic financial instruments). payables
Financial asset is any
asset that is: Measurement: 4. Loans Receivables and
payables.
-Cash Initial:
5. Notes receivables and
-An equity instrument Fair value plus transaction
payables
of another costs, except FVTPL where
entity(ordinary or transaction costs are 6. Investment in
preference); expensed outright.If the nonconvertible
arrangement constitutes preferenceshares and
-Receivables arising
a financing transaction, it non-puttable ordinary
from contractual
is measured at the present shares.
requirements
value.
-Derivatives, options
and warrants under Measurement:
conditions that are
potentially favorable Initial:

Financial liability is any Transaction price

liability that is: including transaction cost
or if constitutes
Payable arising from significant financing, at
contractual present value discounted
requirements at the market rate of
interest for similar
- Derivatives, options
financial instruments.
and warrants under
conditions that are subsequent:
potentially unfavorable
1. Debt instruments – AC
Measurement:
2. Investment in
Initial: unquoted shares –
cost model
Fair value plus
 transaction costs, 3. Investment in shares
except FVTPL where traded in active market
transaction costs are – lower of cost or fair
expense outright value (LCF),with changes
in fair value
Subsequent:
recognized in profit or
FVTPL loss.

FVTOCI Impairment of financial

instrument
AC
4. If FA is measured at AC,
the impairment loss is
the excess of CA over the
PV of cash flows

5. If FA is measured at
cost, the impairment loss
is the excess of CA
over the best estimate
of selling price.
LEASES Measurement: Under PFRS for SMEs, No classification of
leases are accounted for lease in small
1. Lease liability – present
under the old lease entity.Generally, all
value of the lease
standard of full PFRS(PAS leases are
payments to be made
17). The classification of considered operating
over the lease term
lease is based on the leases. No provision
2. Right of use asset – transfer of risk and for sale and lease back.
initially measured at the rewards incidental to
amount of lease liability ownership (substance
adjusted for lease over legal form). (Section
prepayments, lease 20)
incentives received,initial
Major criteria for a finance
direct costs and an
lease:
estimate of restoration,
removal and dismantling a. Transfer of ownership
cost. Under PFRS for of the asset at the end of
SMEs, leases are the lease term.
accounted for under the
b. There is a bargain
old lease standard of full
purchase option.
PFRS(PAS 17). The
classification of lease is c. Lease term is a major
based on the transfer part (75%) of the
of risk and reward economic life of the asset
sincidental to even if title is not
ownership (substance transferred.
over legal form). (Section
d. PV of minimum lease
20)Major criteria for a
payments amounts to at
finance lease:
least substantially all
a. Transfer of ownership (90%) of the fair value of
of the asset at the end the lease asset at the
of the lease term inception of the lease.

.b. There is a bargain

purchase option.

b. Lease term is a
major part (75%) of
the economic life of the
asset even if title is not
transferred.

d. PV of minimum lease
payments amounts to at
least substantially all
(90%) of the fair value
of the lease asset at the
inception of the
lease.Finance lease -
Lessee If the lease is
classified as finance lease,
the lessee shall recognize
an asset and a liability
equal to the lower
between the fair value of
the asset and the
present value of the
minimum lease
payments using interest
rate implicit in the
lease or if not Leases
No classification of
lease in small
entity.Generally, all
leases are considered
operating leases. No
provision for sale and
leaseback.

From the point of

 view of the lessor, the
lease should be
accounted for as either
finance lease or
operating lease based on
the transfer of risks and
rewards incident alto
ownership.

On the part of the lessor,

the finance lease is
classified either as:

a. Direct financing lease –

only recognizes interest
income

b. Sales type lease –

recognizes both interest
income and gross
profit on sales
Revenue from PFRS 15 Under PFRS for SMEs, The accounting for
contracts with revenue is recognized revenue of a small entity
customers requires the entity
based on the principle shall be applied to
to apply the ‘five-
of ‘transfer of significant the following
step’ principle when
risks and rewards.’ transactions and events:
recognizing revenue
from contracts with a. Sale of goods
customers namely:
b. Rendering of services
1. Identify the contract
c. Construction contract
with the customer
d. Deposits or receivables
2. Identify the
yielding interest.
performance
obligations in the e. Dividends from
contract investments in shares
not accounted using
3. Determine the
equity method.
transaction price
Revenue recognition:
4. Allocate the
transaction price to a. Probability that the
the performance economic benefits
obligations associated with the
transaction will flow to
5. Recognize revenue
when (or as)
 performance obligation the entity; and
is satisfied
b. The revenue and
cost can be measured
reliably.

Measurement:- Fair value

of the consideration
received or receivable
using accrual basis.
Conceptual The scope for The scope for conceptual No provision on the
Framework for conceptual framework framework is less detailed scope of conceptual
Financial is more detailed compared to full PFRS. framework.In terms of
Reporting compared to other measurement bases:
In terms of measurement
reporting standards.
bases: a. Historical cost
In terms of
a. Historical cost b. Fair value Financial
measurement bases:
b. Fair value
a. Historical cost

b. Current value

1.Fair value.

2.Value in use and

fulfillment value.

3.Current cost
Exploration and exploration and same provisions for the NONE
evaluation of evaluation of mineral recognition,classification
mineral resources and measurement under
resources full PFRS.
-is defined as the
(PFRS 6) search for mineral
resources after the
entity has obtained
legal right to explore in
a specific area as well as
the determination of
the technical feasibility
and commercial
viability of extracting
the mineral resources.

-The expenditures
incurred by an entity
in connection with
exploration and
evaluation of mineral
resources before
technical feasibility
and commercial
viability of extracting a
mineral resource are
known as exploration
and evaluation
expenditures.