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Items of Other comprehensive income
1. UG/L FROM FVOCi
DEBT SECURiTY
EQUiTY SECURiTY
2. CHANGES iN FV ATTRiBUTED TO CREDiT RiSK OF FVTPL
3. REVALUATiON SURPLUS (PPE)
4. REMEASUREMENT OF DEFiNED BENEFiT PLAN
5. GAiN/LOSS ON TRANSLATiON OF FOREiGN OPERATiON
6. UG/L FROM DERiVATiVES DESiGNATED AS CASH FLOW HEDGE
RECLASSiFiCATiON
ADJUSTMENTS
(CHARGED TO P/L)
NOT SUBJ TO
RECLASSiFiCATiON
(RETAiNED EARNiNGS)
✓ ✓ ✓ ✓ ✓ ✓ ✓
COMPREHENSiVE iNCOME = NET iNCOME + OTHER COMPREHENSiVE iNCOME
OCI
BEG BAL
CHANGES FOR
THE PERiOD
SCI
SCE
SCE
SFP (EQUiTY SiDE)
RETAiNED EARNiNGS
BEG BAL
NET iNCOME
PRiOR PERiOD ERRORS
CHANGES iN ACCTG
POLiCY
ENDiNG BAL
DiViDENDS
ENDiNG BAL
Retrospective
restatement
(±) APPROPRiATED UNAPPROPRiATED RESTRiCTED UNRESTRiCTED
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Balance sheet perspective
ASSETS
LiABiLiTiES
EQUiTY
CURRENT
NON-CURRENT
OPERATiNG
CURRENT
NON-CURRENT
INVESTiNG
OPERATiNG
FiNANCiNG
FiNANCiNG
INTEREST RECEiVED
INTEREST PAiD
DiViDENDS RECEiVED
DiViDENDS PAiD
OPERATiNG
OPERATiNG
OPERATiNG
FiNANCiNG
INVESTiNG
FiNANCiNG
INVESTiNG
OPERATiNG
Benchmark Alternative
Net cash from:
operating activities xx
Investing activities xx
financing activities xx
Net cash increase (decrease) Pxx
Add: cash & ce, beg xx
Cash & CE, ending Pxx
Direct method:
Cash received from customers xx Cash paid to suppliers (xx) Cash paid to operating expenses (xx) Separately presented: Interest paid (xx) Income tax paid (xx) Net cash provided (used) OA xx
Indirect method:
Income before tax
- Adjustments for non-cash items
- dep’n expense
- amort’n expense
- Changes in working capital
- Separately presented: Interest paid Income tax payable Indirect rel Direct rel
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EiTHER OF THE FOLLOWiNG:
COST LESS ACCUMULATED DEPRECiATiON AND
ACCUMULATED iMPAiRMENT LOSS
A. Cost model B. Revaluation Model REVALUED AMOUNT LESS
ACCUMULATED DEPRECiATiON AND
ACCUMULATED iMPAiRMENT LOSS
Will not change almost all the time.
Fair value of the PPE on the
revaluation date
PER CLASS
BASiS
To prevent selective
application of model
Cost or revaluation
regardless of choice
made for other classes.
CLASS
ASSETS WiTHiN A CLASS
All are accounted for
using cost model or all
are accounted for using
revaluation model
SYSTEMATiC ALLOCATiON OF DEPRECiABLE AMOUNT OVER THE USEFUL LiFE OF THE PPE DEPRECiABLE Cost less estimated residual value AMOUNT Expected proceeds from the disposal Expected number of periods^ RESiDUAL VALUE of PPE at the end of its useful life. or output that the PPE is usable by an entity.
DEPRECiATiON
A. EXPECTED USAGE
B. TECHNiCAL OBSOLESCENCE C. PHYSiCAL WEAR AND TEAR D. LEGAL LiMiTS (^) Leasehold improvements
DEPRECiATiON
RATE
COST LESS RESIDUAL VALUE
= USEFUL LIFE
Depreciation methods (^) A. TiME-BASED Manner of computing depreciation
B. OUTPUT-BASED
C. SPECiAL METHODS
Start - when the PPE is ready for intended use End - earlier of the ff: a. Date of derecognition b. Held for sale c. Fully depreciated (depreciation will continue if Residual value decreases) LAND iS NORMALLY NON-DEPRECiABLE Passage of time Based on the quantity produced/used
REPORTiNG OF
DEPRECiATiON
A. EXPENSED GENERALLY
B. CAPiTALiZED iN THE COST OF AN ASSET 0
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FUNCTiON OF TiME
Time-based (PASSAGE OF TiME)
1. STRAiGHT - LiNE
METHOD
2. DECREASiNG -
CHARGE METHODS
Equal amounts of
depreciation for each period
Benefits realized = same every year
Building A. SUM-OF-THE-YEARS-DIGIT (SYD)
Decreasing amount of
depreciation per period
PPEs with sudden decrease in productivity
Benefits realized = decreasing every year
To compensate for the increased repairs
and maintenance during the later years.
EXAMPLE: COST 1M, RES VAL 100K, UL 5 YEARS
ANNUAL DEPRECiATiON = (1M - 100K)/5 YRS = 180, DEP ACCUM DEP 12/31/21 180,000 180,000 820, 12/31/22 180,000 360,000 640, 12/31/23 180,000 540,000 (^) 460, ACQUiRED JULY 1, 2021 DEP ACCUM DEP 12/31/21 90,000 90,000 910, 12/31/22 180,000 270,000 730, 12/31/23 180,000 450,000 550, 12/31/24 180,000 630,000 370, 12/31/25 180,000 810,000 190, 12/31/26 90,000 900,000 100,
= [ N X (N+1) ]
ACQUiRED OCT 1, 2021
Fraction of the years’ digit in computing depreciation
N = USEFUL LiFE iN YEARS EXAMPLE: COST 1M, RES VAL 100K, UL 5 YEARS = [ 5 X (5+1) ] 5 + 4 + 3 + 2 + 1 = 15 2 NUMERATOR > CHANGES DENOMiNATOR > THE SAME = 15 Y1 Y2 Y DEP FRACTiON 12/31/21 900,000 5/15 300, 12/31/22 900,000 4/15 240, 12/31/23 900,000 3/15 180, 12/31/24 900,000 2/15 120, 12/31/25 900,000 1/15 60, ACQUiRED JULY 1, 2021 ACQUiRED JAN 1, 2021 DEP FRACTiON 12/31/21 900,000 5/15 300, 12/31/22 900,000 4/15 240, 12/31/23 900,000 3/15 180,
150K 150K
120K 120K
90K
150K 270K 210K
DEP FRACTiON 12/31/21 900K 5/15 300, 12/31/22 900K 4/15 240, 12/31/23 900K 3/15 180,
75K 225K
60K 180K
45K
75K 285K 225K
ACQUiRED JAN 1, 2021 .
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Special depreciation methods
- COMPOSiTE METHOD
1. GROUP METHOD
- COMPONENT DEPRECiATiON METHOD
Similar assets
Dissimilar assets
working together
Combining several assets for
depreciation (US GAAP)
PAS 16
Single asset - components with
useful life that vary widely.
Separate depreciation for each
major component
E. ADDiTiONAL ASSET - REViSE THE DEPRECiATiON RATE F. COMPOSiTE LiFE - TOTAL DEPRECiABLE AMT ANNUAL DEPRECiATiON
More of straight-
line method
PPE COST RV DA UL
A 260k 20k 240k 6yrs
B 1.5M 300k 1.2M 10yrs
C 870k 70k 800k 5yrs
2,630k 2.240k
GROUP & COMPOSiTE
Annual dep
Depreciation rate
Composite life
2,240,000/320,000 = 7 years
SALE OF PPE C: NO GAiN OR LOSS
Charged to accumulated depreciation
A. PER ASSET BASiS - COMPUTE FOR ANNUAL DEPRECiATiON B. TOTAL THE ANNUAL DEPRECiATiON COMPUTED iN A PER ASSET BASiS C. COMPUTE FOR THE DEPRECiATiON RATE: D. DEPRECiATiON CHARGE =
GROUP & COMPOSiTE
TOTAL ANNUAL DEPRECiATiON TOTAL COST OF ASSETS iN THE GROUP DEPRECiATiON RATE X TOTAL COST OF THE GROUP
Cash 200,
Accum dep 470,
PPE C 870,
Simplification of
bookkeeping. Not
under IFRS
COMPONENT DEPRECiATiON
AiRCRAFT = P50M Split to major components
Body 25M 20yrs 1.25M
Engines 15M 10yrs 1.5M
Internal fittings 5M 5yrs 1M
All others 5M 4yrs 1.25M
5M
