No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Item
Qualitative characteristics of information
presented and Basic Features
Accrual basis
Formulation of accounting policies
Complete set of financial statements
Minimum line items in the statement of
financial position
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PRESENTATION OF FINANCIAL STATEMENTS
PFRS for SMEs
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
PFRS for Small Entities
Basic Features
Qualitative Characteristics
Understandability
Relevance
Materiality
Substance over form
Prudence
Completeness
Comparability
Timeliness
Balance between benefit and cost
Undue cost or effort
Applied
Based on
• PFRS for SMEs
• Pervasive recognition and measurement bases
• Requirements of PFRS for those with no provisions in the PFRS for SMEs
Fair presentation
Compliance with the PFRS for SEs
Going concern
Frequency of reporting
Consistency of presentation
Comparative information
Materiality and aggregation
Same as in full PDRS, except that when an entity makes retrospective adjustments due to change in
accounting policy or correction of prior period error, there is no additional requirement to present a
statement of financial position as at the beginning of the prior period.
Allowed to present a combined statement of income and retained earnings when changes in equity arise
only from profit or loss, payment of dividends, corrections and changes in accounting policy.
Same as in full PFRS, except there are no requirements for separate line presentation of the following:
• Assets classified as held for sale
• Liabilities relating to disposal groups classified as held for sale
• Investments in associates and joint ventures
Applied
Based on
• PFRS for Small Entities (SEs)
No additional guidelines are provided, as
logic suggests that Small Entities’ transactions
are simple and addressed in the PFRS for SEs.
Same as in PFRS for SME. In as much as no other
comprehensive income is presented for a small
entity, an income statement is prepared instead
of the statement of comprehensive income.
There are no prescribed minimum line items, but
suggests presentation of major accounts either
on the face of the statement of financial position
or in the notes.
R.SORIANO
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B.C.VILLALUZ|J.P.BINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Minimum line items on the face of the
statement of comprehensive income or
statement of income
Statement of changes in equity
Note: The full PFRS provides options for
presentation of dividends: either in the
statement of changes in equity or in the notes.
Changes in accounting policies
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
Same as in full PFRS except that impairment loss is not required to be presented separately.
There are no prescribed minimum line items.
Same as in full PFRS, but does not provide option for presentation of dividends.
There are no specific guidelines.
Same as in full PFRS but does not require a restated statement of financial position as at the beginning of
the prior year.
There is no requirement for restatement of
comparative prior period. The cumulative
amount is shown as adjustment to the beginning
balance of equity of the current period. The
balances of the assets and liabilities of the
current period are adjusted.
There is no requirement for restatement of
comparative prior period. The cumulative
amount is shown as adjustments to the beginning
balance of equity of the current period. The
balances of the assets and liabilities of the
current period are adjusted.
Not required
Same as in full PFRS except that the following are
not required to be disclosed:
a. Sensitivity analysis
b. Key sources of judgements
c. Key sources of estimation uncertainty
Correction of prior period errors
Same as in full PFRS but does not require a restated statement of financial position as at the beginning of
the prior year.
Earnings per share presentation
Notes to financial statements
Not required
Same as in full PFRS except sensitivity analysis is not required.
Disclosure requirements
Substantially reduced due to the following reasons:
• Some topics are not included in PFRS for SMEs;
• Some measurement principles are simplified;
• Some opinions are omitted; and
• Cost-benefit is considered
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R.SORIANO
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B.C.VILLALUZ|J.P.BINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Element/ Transaction
Inventories
Investments in associates
Elements in associations and
joint ventures (continued)
Investment in jointly
controlled entities
Basic equity investments
(neither investment in
associates nor investment in
joint ventures)
Debt instruments
Investment property
Mobile
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
ACCOUNTING TREATMENTS FOR FINANCIAL STATEMENT ELEMENTS
PFRS for SMEs
PFRS for Small Entities
Same as in full PFRS
Costing procedures are the same as in full PFRS, except inventories are
subsequently measured at the lower of cost of market value. Market
value is the probable selling prince to willing buyers as of reporting date.
Use either the equity model or
Same as in PFRS for SMEs except small entities can choose freely
(a) The cost model for investments with no published price quotations and measurement at fair between the cost model and the fair value model.
value is impracticable, and
(b) The fair value model for investments with published price quotations and fair value can be
determined reliably without undue cost and effort.
Under both fair value model and cost model, dividends are reported as income without regard to
the sources of dividends
Use either the equity model or
No such account is used, as an entity with investment in jointly controlled
(a) The cost model for investments with no published price quotations and measurement at fair entities may not qualify as small entity.
value is impracticable, and
(b) The fair value model for investments with published price quotations and fair value can be
determined reliably without undue cost and effort.
Under both fair value model and cost model, dividends are reported as income without
regard to the sources of dividends.
Designed as at FV through profit or loss, for instruments with published price quotations and FV can Initially measured at cost, including transaction cost.
be determined reliably without undue cost and effort, accounted for at cost. Subject to impairment,
which is taken in profit or loss.
At reporting date, they are measured at the lower of cost or fair value,
with impairment taken to profit or loss.
Initially recognized at transaction price and subsequently amortized using the effective interest
Same as in PFRS for SMEs.
method. Impairment loss and reversal of impairment are recognized based on objective of
impairment and recovery, respectively.
Same as in full PFRS for immediate recognition, except borrowing costs are expensed.
Same as in the PFRS for SMEs.
Investment property held under operating lease is initially measured at the lower between fair value
and present value of minimum lease payments.
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R.SORIANO
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B.C.VILLALUZ|J.P.BINALUYO
No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Research and development
costs
Intangible assets whose
estimated useful life cannot
be determined reliably.
Income tax
Leases
: 0927 283 8234
Telephone
: (043) 723 8412
Gmail
: icarecpareview@gmail.com
Investment property whose fair value can be determined reliably without undue cost or effort shall
be subsequently measured using the fair value model. All other investments shall be measured using
the cost model.
Recognized as expense when incurred.
Same as in PFRS for SMEs, except that no further requirement to disclose
fair value under the cost model.
Same as in PFRS for SMEs.
Amortized based on management’s best estimate, but not to exceed 10 years.
Same as in PFRS for SMEs.
Same as in full PFRS
Choice between accrual of
(a) Current tax only (payable or receivable) and
(b) Current and deferred income tax.
Account as finance lease when the lease transfers substantially the risks and rewards of ownership
to the lessee. Otherwise, record the lease (based on old PAS 16 under full PFRS). However, under
operating leases, there is no requirement to account for lease payments under the straight-line
approach.
Borrowing costs
Recorded as expenses
Employee benefits
Same as in PFRS except that the use of projected unit credit method (PUCM) may be waived if entity
is not able to use it without undue cost or effort. A simplified approach that ignores future salary
increases, future services and mortality of current employees is used in lieu of PUCM.
Option may be exercised to treat actuarial gains and losses in
(a) Profit or loss or
(b) Partly in profit or loss and partly in OCI.
Disclosure requirements
Substantially reduced
Source: Empleo, P.M. (2020). Intermediate Financial Reporting. La Limariza Printing Press.
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When (b) is opted, both the current and deferred taxes are recognized in
profit or loss.
Account for all leases as operating lease.
Same as in PFRS for SMEs.
All employee benefit costs are taken to profit or loss, unless it forms part
of an asset account.
Substantially reduced
R.SORIANO
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B.C.VILLALUZ|J.P.BINALUYO