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PARTNERS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2018
The registered address of the company is Aria St., Manila Times Village,
Pamplona Las Pias City.
The financial statements of the company have been prepared based on historical
measurement and are presented rounded off in Philippine pesos, which is the companys
functional and presentation currency. All values represent absolute amounts except when
otherwise indicated.
The accompanying financial statements have been prepared on a going concern basis,
which contemplate the realization of assets and settlement of liabilities in the normal course
of business.
The following accounting standards that have been published and issued by the
International Accounting Standards Board (IASB) and adopted by the FRSC which become
effective for accounting periods beginning on as after January 1, 2010 were adopted by the
Company:
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Income and Income Statement
Section 6 - Statement of Changes in Equity and
Statement of Income and Retained
Earnings
Section 7 - Statement of Cash Flows
Section 8 - Notes to Financial Statements
Section 10 - Accounting Policies, Estimates &
Errors
Section 11 - Basic Financial Instruments
Section 17 - Property and Equipment
Section 20 - Leases
Section 21 - Provisions and Contingencies
Section 22 - Liabilities and Equity
Section 23 - Revenue
Section 27 - Impairment of Assets
Section 28 - Employee Benefits
Section 29 - Income Tax
Section 32 - Events After the End of the
Reporting Period
Section 33 - Related Party Disclosures
The effects of these new standard, amendments and interpretation on the companys
accounting policies and in the amounts disclosed in the financial statements are summarized
as follows:
Section 1, Small and Medium Sized Entities, IFRS for SMEs is intended for
Non Publicly Accountable Entities that publish general purpose financial statements for
external users.
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Section 7, Statement of Cash Flows, requires the provision of information about
the historical changes in cash and cash equivalents of an entity by means of a cash flow
statement which classifies cash flows during the period from operating, investing and
financing activities.
Section 10, Accounting Policies, Estimates and Errors, eliminates the concept of
fundamental error and the allowed alternative to retrospective application of voluntary
changes in accounting policies and retrospective restatement to correct prior period errors.
The section defines material omissions and misstatements and describes how to apply the
concept of materiality when applying accounting policies and correcting errors.
Section 11, Basic Financial Instruments, applies to basic financial instruments and
is relevant to all entities. An entity shall recognize a financial asset or a financial liability only
when the entity becomes a party to the contractual provisions of the instrument. When a
financial asset or financial liability is recognized initially, an entity shall measure it at the
transaction price unless the arrangement constitutes, in effect, a financing transaction.
Section 17, Property and Equipment, prescribes the accounting treatment and
related disclosures for property and equipment, investment property, and non-current assets
held for sale whose fair value cannot be measured reliably without undue cost and effort. It
provides guidance on initial and subsequent recognition as well as measurement after
recognition. It requires depreciation for each significant part of an item of property, plant and
equipment. The standard also provides guidance on the determination of the carrying amount
of the assets, the residual value, depreciation period and derecognition principles to be
observed.
Section 20, Leases, prescribes that lease payments under operating leases shall be
recognized as income/expense on a straight-line basis unless another basis is more
representative of the timing of the benefits obtained by the user of the asset or the payments
are structured to increase in line with expected general inflation.
Section 22, Liabilities and Equity, establishes principles for classifying financial
instruments as either liabilities or equity and addresses accounting for equity instruments
issued to individuals or other parties acting in their capacity as investors in equity instruments
(i.e. in their capacity as owners).
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Section 27, Impairment of Assets , prescribe the procedures that an entity applies to
ensure that its assets are carried at no more than their recoverable amount if its carrying
amount exceeds the amount to be recovered through use or sale of the asset. If this is the case,
the asset is described to be impaired and the standard requires the entity to recognize an
impairment loss. The section also specifies when an entity should reverse an impairment loss
previously recognized.
Section 29, Income Tax, covers accounting for income tax. It requires an entity to
recognize the current and future tax consequences of transactions and other events that have
been recognized in the financial statements.
Section 32, Events After the End of the Reporting Period, defines events after the
end of the reporting period and sets out principles for recognizing, measuring and disclosing
such events.
Section 33, Related Party Disclosures, provides additional guidance and clarity in
the scope, definitions and the disclosures for related parties. It requires disclosure of the
compensation of key management personnel.
Adoption of the above standards, amendments and interpretations, upon which the
company has opted to adopt, did not have any significant effect on the companys financial
statements. These, however, requires additional disclosures on the companys financial
statements.
CASH
Cash are stated at face value. Cash includes petty cash fund which is being utilized to
fund expenses on a day to day transaction of the company and cash in banks which consists of
current and savings account.
Other current assets are carried at the transaction cost and include prepaid supplies.
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PROPERTY AND EQUIPMENT
Property and equipment are initially measured at cost and subsequently measured at
cost less any accumulated depreciation and any accumulated impairment losses.
The initial cost of property and equipment comprises its purchase price and any cost
directly attributable to bringing the asset to its working location and condition necessary for it
to be capable of operating in the manner intended by the management.
A part of some items of property and equipment may require replacement at regular
interval. The entity decide not to add to the carrying amount of an item of property and
equipment, the cost of replacing part of such an item when that cost as incurred if the
replacement part is expected not to provide incremental future benefits to the entity.
Expenditures incurred after the property and equipment have been put into
operations, such as repairs and maintenance and overhaul costs, are normally charged to
operations in the period the costs are incurred. In situations where it can be clearly
demonstrated that the expenditures have resulted in an increase in the future economic
benefits expected to be obtained from the use of an item of property and equipment beyond its
originally assessed standard of performance, the expenditures are capitalized as additional
costs of property and equipment. Cost also includes any asset retirement obligation and
interest on borrowed funds used. When assets are sold or retired, their costs and accumulated
depreciation, amortization and impairment losses, if any, are eliminated from the accounts and
any gain or loss resulting from their disposal is included in the statement of operations of such
period.
The useful life of each of the property and equipment is estimated based on the period
over which the asset is expected to be available for use. Such estimation is based on a
collective assessment of industry practice and experience with similar assets.
The assets' useful lives and depreciation and amortization method are reviewed, and
adjusted if appropriate, at each financial year-end.
Other current liabilities are carried at transaction cost which includes statutory
liabilities.
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PARTNERS EQUITY
Partners Equity includes initial investment of the partner and additional investments
made. Profit and Loss sharing is based on capital contribution on the results of operation
which are taxable per individual partners.
Revenue is recognized when it is probable that the economic benefits associated with
the transaction will flow to the Company and the amount of the revenue can be measured
reliably.
Revenue is measured at the fair value of the consideration received or receivable and
represents amounts receivable for goods or services provided in the normal course of
business.
Service Income revenue is recognized when the corresponding services
are rendered to the customers. The related cost of service are recognized
when incurred.
Sales revenue is recognized when the corresponding sales has been made
to customers. The related cost of goods are recognized when sales occurred.
Cost and Expense are recognized in the statement of income upon the utilization of
the service or in the date they are incurred.
EMPLOYEE BENEFITS
Employee benefits represents; (a) short-term employee benefits, which are employee
benefits (other than termination benefits) that are wholly due within twelve months after the
end of the period in which the employees render the related service, (b) post-employment
benefits, which are employee benefits (other than termination benefits) that are payable after
the completion of employment, (c) other long-term employee benefits, which are employee
benefits (other than post-employment benefits and termination benefits) that are not wholly
due within twelve months after the end of the period in which the employees render the
related service and (d) termination benefits, which are employee benefits payable as a result
of either an entitys decision to terminate an employees employment before the normal
retirement date, or an employees decision to accept voluntary redundancy in exchange for
those benefits or a retirement payment in accordance to law or registered retirement plan
agreement.
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The company operates within the Philippines and employed about Sixteen (15)
employees as of December 31, 2022 and 2018, respectively.
The Company has no established formal retirement plan, however the company pay
its retirement benefit under Republic Act 7641 The New Retirement Law of the Philippines
which mandates the company to pay the employee a retirement benefit upon reaching the age
of sixty years or more, but not beyond sixty-five years and who have rendered at least five
years in the company. Retirement benefit is equivalent to at least one-half month for every
year of service, a fraction of at least six (6) months being considered as one whole year.
Furthermore, "one-half month salary" was defined to include: (a) Fifteen (15) days salary of
the employee based on his latest salary rate; (b) The cash equivalent of five (5) days of
service incentive leave; (c) One-twelfth (1/12) of the 13th month pay due the employee, and
(d) All other benefits that the employer and employee may agree upon that should be included
in the computation of the employee's retirement pay. The company has no other post-
employment benefits other than retirement benefit.
INCOME TAX
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VALUE-ADDED TAX
Revenues, expenses and assets are recognized net of the amount of value-added tax
except:
The net amount of value-added tax recoverable from, or payable to, the taxation
authority is included as part of other current assets or payables in the balance sheets.
Initial Recognition
The company recognized a provision when the company has an obligation at the
reporting date as a result of a past event and it is probable that the company will be required
to transfer economic benefits in settlement and lastly the amount of ob ligations can be
estimated reliably.
The company measured provisions at the best estimate at the amount required to
settle the obligations at the reporting date. The best estimate is the amount an entity would
rationally pay to settle the obligations at the end of the reporting period or to transfer it to the
third party at that time.
Subsequent Measurement
The company shall charge against a provisions only those expenditures for which the
provisions was originally recognized and review provisions at each reporting date and adjust
them to reflect the current best estimate of the amount that would be required to settle the
obligations at that reporting date. Any adjustments to the amounts previously recognized shall
be recognized at profit or loss unless the provisions are originally recognized as part of the
cost of an asset. When a provision is measured at the present value of the amount expected to
be required to settle the obligations, the unwinding of the discount shall be recognize as
finance cost in profit or loss in the period it arises.
The company adjust the amounts recognized in its financial statements including its
related disclosures to reflect adjusting events after the end of the reporting period. Hence, the
company shall not adjust the amounts recognized in its financial statement to reflect non-
adjusting events after the end of the reporting period.
RELATED PARTIES
Related party relationships exists when one party has the ability to control, directly or
indirectly through one or more intermediaries, the other party or exercise significant influence
over the other party in making financial and operating decisions. This includes: (1) individual
owning, directly or indirectly through one or more intermediaries, control, or are controlled
by, or under common control with, the Company; (2) associates; and (3) individuals owning,
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directly or indirectly, an interest in the voting power of the Company that gives them
significant influence over the Company and close members of the family of any such
individual.
The key management personnel of the Company and post-employment benefit plans
for the benefit of Companys employees are also considered to be related parties.
3.1 JUDGEMENTS
3.2 ESTIMATES
The Companys financial statements prepared in accordance with PFRS for SMEs
require management to make judgments and estimates that affect amounts reported in the
financial statements and related notes. Judgments and estimates are continually evaluated and
are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. Actual results may ultimately
differ from these estimates.
The following are the key assumptions concerning the future, and other key sources
of estimation uncertainty at the end of the reporting period, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year.
The Company estimates the useful lives of property and equipment based on the
period over which the assets are expected to be available for use. The estimated
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useful lives of property and equipment are reviewed periodically and are updated if
expectations differ from previous estimates due to physical wear and tear, technical or
commercial obsolescence and legal or other limits on the use of the assets.
The estimated useful lives of property and equipment are reviewed, and adjusted if
appropriate, at the end of each reporting period.
The Company assesses the value of property, plant and equipment which require the
determination of future cash flows expected to be generated from the continued use
and ultimate disposition of such assets, and require the Company to make estimates
and assumptions that can materially affect the financial statements. Future events
could cause the Company to conclude that property and equipment and other long-
lived assets are impaired. Any resulting impairment loss could have a material
adverse impact on the Company's financial condition and results of operations.
The preparation of the estimated future cash flows involves significant judgment and
estimations. While the Company believes that its assumptions are appropriate and
reasonable, significant changes in these assumptions may materially affect the
Companys assessment of recoverable values and may lead to future additional
impairment charges.
c) Revenue recognition
The Companys revenue recognition policies require the use of estimates and
assumptions that may affect the reported amounts of revenues and receivables.
Differences between the amounts initially recognized and actual settlements are taken
up in the accounts upon reconciliation. However, there is no assurance that such use
of estimates may not result to material adjustments in future periods.
A financial asset or a financial liability is recognized only when the entity becomes a
party to the contractual provisions of the instrument.
Subsequent Measurement
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For services rendered to customer on account, a receivable is recognized at the
undiscounted amount of cash or other consideration expected to received, net of any
impairment or nay uncollectible amount.
(a) the contractual rights to the cash flows from the financial asset expire or are settled, or
(b) the entity transfers to another party substantially all of the risks and rewards of ownership
of the financial asset, or
(c) the entity, despite having retained some significant risks and rewards of ownership, has
transferred control of the asset to another party and the other party has the practical ability to
sell the asset in its entirety to an unrelated third party and is able to exercise that ability
unilaterally and without needing to impose additional restrictions on the transfer.
An entity shall derecognize a financial liability (or a part of a financial liability) only
when it is extinguished, that is when the obligation specified in the contract is discharged, is
cancelled or expires.
NOTE 5 CASH
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This account is composed of:
(See appendix I)
NOTE 8 LAND
NOTE 9 REVENUE
This account consists of:
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(See appendix II)
NOTE 11 COMPENSATION
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This account is composed of:
(See appendix V)
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