Based on the FS you have researched thoroughly discuss your observations on the FS.

Focus on the ff:

1. What FS are reported by the company?

The FS reported by the Company are:
Statement of Financial Position
Income Statement
Statement of Comprehensive
Income

Statement of Changes in Equity

Statement of Cash Flows
Notes to the Financial Statements

2. On the Statement Financial Position:

2.1

The presentation and classification used in the presentation of the SFP

The Statement of Financial Position presented by the Company is a report format

which simply shows the assets, followed by the liabilities then by the shareholders equity in
vertical sequence. It shows the net balances at the end of the period
The order or format in which the company presents items in the statement is the
classification of current and non-current distinction for assets and liabilities. Assets can be
presented current then non-current, or vice versa. Liabilities and equity can be presented
current liabilities then non-current liabilities then equity, or vice versa.
San Miguel Corporations consolidated total assets as of December 2014 amounted to P1.2
trillion, P47 billion higher than 2013 mainly due to investments in property, plant and
equipment, particularly by Power and Petron; as well as project development costs for the
companys infrastructure business, On the liabilities side, short-term debt increased by about
P37 billion while long-term debt declined by P4.5 billion, with the increased short-term
requirements of Petron, coupled with the decline in long-term debt of San Miguel Brewery Inc.
Total interest-bearing debt amounted to P483 billion, while consolidated net debt is at P224.4
billion. Total equity attributable to equity holders of the parent company increased to P240.5
billion in 2014 from P237.7 billion in 2013, primarily due to income during the year net of
dividend declarations. The companys dividends to common and preferred shares amounted to
P3.3 billion and P6.1 billion, respectively. On the other hand, non-controlling interest increased
to P149.0 billion in 2014 from P128.1 billion in 2013 with SMC Global Powers issuance of
US$300 million undated subordinate capital securities, coupled with Petrons issuance of P9.9
billion preferred shares.

2.2

The accounts included in the SFP

The accounts included in the Statement of Financial Position includes; Assets, Liabilities
and Equity.
In the Asset section the accounts are:
o Cash and cash equivalents
o Current portion of biological assets
o Trade and other receivables
o Prepaid expenses and other current
o Inventories
assets

o Investments and advances

o Available-for-sale financial assets
o Property, plant and equipment
o Investment property and so on
While in the Liabilities and Equity section includes:
o Loans payable
o Finance lease liabilities
o Accounts payable and accrued
o Equity Attributable to Equity Holders of
expenses
the Parent Company
o Finance lease liabilities
o Additional paid-in capital
o Income and other taxes payable
o Revaluation increment
o Dividends payable
o Reserve for retirement plan
o Long-term debt
o Cumulative translation adjustments
o Finance lease liabilities
o Retained earnings
o Deferred tax liabilities
o Treasury stock and etc.

3. On the Income Statement:

3.1

The form of the IS used by the company

The Income Statement which the SMC prepared and used is the FUNCTIONAL
APPROACH or Cost of Sales Method. It classifies expenses according to their function as part of
cost of sales, administrative and other operating activities. The Company uses the format of
Condensed Income Statement, the format aggregates the entire income statement into
just a few lines, such as one line each for sales, cost of sales and operating expenses
3.2

The accounts and the arrangement as presented in the IS

They arranged the accounts first by classifying the Sales, Cost of Sales, Gross Profit,
Selling and Administrative Expense, Interest Expense and other Financing Charges, Interest
Income, Equity in Net Earnings of Associates and Joint Ventures, Other Income and so on to
arrive at the NET INCOME which will be attributable or distributable to the Equity holders of the
Parent Company.

4. On Comprehensive Income
4.1

Discuss how the comprehensive income was presented

The comprehensive income was presented as an extension of the income statement,

they presented two consecutive years as a comparison which shows the total Comprehensive
Income for the year ended. It shows first the account of Net Income which costs 28,132 for the
last period of 2014. And compared to the 2013 it decreased in amount. The total
Comprehensive Income was divided and distributed to Parent Company that costs P12, 103 for
the year of 2014.
4.2

What items formed part of the CI?

Items that may not be reclassified to profit or loss are:

o Equity reserve for retirement
o Income tax benefit
o Share in other comprehensive income

Items that may be reclassified to profit or loss are:

o Gain (loss) on exchange differences on translation of foreign operations
o Net gain (loss) on available-for-sale financial assets
o Income tax benefit
o And Other Comprehensive Income that will arrive at the total comprehensive
income which will be attributable to the Parent Company

5. On the Statement of Changes in Equity:

5.1

Discuss how the statement was presented

The Statement of Changes in equity prepared by the company summarizes the

changes that occurred in owners equity. Changes in an enterprises equity between two
balance sheet dates reflect the increase or decrease in its net asset during the period. The
total or net Comprehensive Income is presented in the statement as well as the beginning
balance of each component in the statement and the movements under them that brought
about the ending balances.
5.2

What items worth noting were included in the statements

The Items that are worth noting in the statement includes the beginning balance and
additional investments the cash dividends and its distribution to common and
preferred shares, Issuance of common shares, and the share in the comprehensive
income.

6. On the Cash Flow Statement

6.1

Discuss how the cash flow statement is presented

Operating activities generally involve providing services, and producing and delivering
goods. Cash flows from SMC are generally the cash effects of the transactions that enter
during the year of 2014 and 2013 that will determine the profit or loss at the end of the period.
The Cash Flows reported by the company shows the amount of cash received and disbursed. It
is a formal statement that classifies cash receipts and cash payments into operating, investing
and financing activities. The statement prepared by the San Miguel Corporation shows the net
increase in the cash during the last period of 2014 compared to the 2013 statement. Their
presentation of the Cash Flows helps project the future net cash flows of entity.
The SMC used Direct Method in preparing their Statement of Cash Flows; the entitys
net cash provided by the company is obtained by adding the individual operating cash inflows
and then subtracting the individual operating cash outflows. They have been separated or
determined the major classes of operating cash flows by using Cash Inflows/Outflows, Cash
Flows from Investing Activities and Cash Flows from Financing Activities.
6.2

What items worth noting were included in the statement?

The Items that are worth noting in the statement includes the Cash received from
clients, Interest expense and other financing charges, Cash generated from
operations and of course the Income taxes paid. In the Cash flows from investing activities
includes making and collecting loans, acquiring and disposing of investment in debt or equity
securities; and obtaining and selling of property and equipment and other productive assets
like Additions to property, plant and equipment, Additions to investments and
advances while in the Cash flows from financing activities includes obtaining owners and
creditors like Cash dividends paid, Proceeds from issuance of capital stock.

7. On the Notes to the FS

7.1

Discuss the outline in the presentation of the notes to FS.

The Notes to the Financial Statements made by the company is very long, each of the
statements have notes that can provide information that cannot be disclosed or showed on the
face of the financial statements. This information presented by the company provides
quantitative and qualitative info and can be used in interpreting the financial statements made
by the year of 2014. Since they are not found on the face of the financial statements and have
a bearing in interpreting the financial statements, they are placed to the notes to the financial
statement section of the auditors report.
7.2

What salient items are worth noting in the part of the notes to FS?
The salient items are worth noting in the part of the notes to Financial Statements are:
o Companys Information
o Investments and Advances
o Reporting Entity
o Prepaid Expenses and Other
o Basis of Preparing the Financial
Current Assets
o Available-for-Sale Financial
Statements
o Statement of Compliance
Assets
o Property, Plant and Equipment
o Summary of Significant
o Investment Property
Accounting Policies
o Significant Accounting
o Biological Assets
Judgments, Estimates and
o Cost of Sales
Assumptions
o Selling and Administrative
o Business Combinations
Expenses
o Investments in Shares of Stock
o Significant Agreements and
of Subsidiaries
Lease Commitments
o Segment Information
o Retirement Plans
o Assets Held for Sale
o Financial Risk and Capital
o Cash and Cash Equivalents
Management Objectives and
o Trade and Other Receivables
Policies
o Financial Assets and Financial
o Inventories
Liabilities

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o FINANCIAL
STATEMENTS

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(Preliminary Exam)
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o Prepared by:
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o ARA MAE STA. CATALINA

o BSA-3B
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o Ms. Pie Zeta Acoba
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Financial Management Teacher