ADAMAY INTERNATIONAL CO., INC.

NOTES TO THE FINANCIAL STATEMENTS

Note 1 – General Information

Corporate Information
ADAMAY INTERNATIONAL CO., INC. (the Company) was registered with Securities and Exchange
Commission (SEC) on December 7, 1998 and started commercial operations on March 15, 2001. The Company’s
primary purpose is to engage in, operate, conduct, and maintain the business of manufacturing, importing,
exporting, buying, selling or otherwise dealing in, at wholesale basis goods such as: office forms, office
equipment, paper products and other related products, nature, and any and all equipment, materials, supplies used
or employed in or related to the manufacture of such finished products.

The Company amended its article of incorporation last April 20, 2009 to include in its purpose the provision of
warehousing/logistics services to various PEZA and/or Board of Investments (BOI) – registered export enterprises
with valid Customs Bonded Warehouses. The warehousing services started its operations on August 1, 2009.

On August 16, 2000, the Company’s registration with the Philippine Economic Zone Authority (PEZA) as an
ECOZONE Export Enterprise to engage in the manufacture of printed materials such as business forms,
brochures/manuals, catalogs, cards, labels, tags and others, was approved under Certificate of Registration No.
00-066.

As an approved registrant, the Company can avail of the applicable incentives as provided for by Book VI of the
Omnibus Investment Code of 1987 and Republic Act No. 7916, as amended through proper application with
PEZA for necessary approval. As such, the Company is entitled to income tax holiday incentive for four years
from the start of its commercial operations until March 2005. Subsequent to this date, the Company has been
subjected to the applicable tax rate of five percent (5%) on gross income.

On April 18, 2005, the Company was issued a permit by PEZA for the implementation of its new activities
namely: a) encoding of various documents; and, b) preparation of native products and gift box, to be undertaken
at AICI’s existing facility at the Calmeray Industrial Park II – Special Economic Zone (CIP II – SEZ), subject to
the terms and conditions of AICI’s registration agreement with PEZA.

The Company’s principal office is located at Carmelray Industrial Park II, Calamba, Laguna.

The Company’s accreditation with ISO 9001:2000 5S and ISO 14001:2004 – environmental was approved on
August 13, 2004 and August 8, 2005 respectively.

Approval and Authorization for Issuance of the Financial Statements

The financial statements of the Company as at and for the years ended, December 31, 2017 and 2016,were
approved and authorized for issue by Mieko Yamada, President and Chairman of the board, and Eiko Yamada,
Treasurer, on behalf of the board of directors on March 9, 2018.

Note 2 – Basis of Preparation and Statement of Compliance

Basis of Preparation
The financial statements of the Company have been prepared on a historical cost basis. The financial statements
are presented in Philippine peso, which is the Company’s functional currency. All values are rounded to the
nearest Philippine peso, except when otherwise indicated.

Statement of Compliance
The accompanying financial statements have been prepared in compliance with accounting principles generally
accepted in the Philippines as set forth in the Philippine Financial Reporting Standards (PFRS). This financial
reporting framework includes PFRS, Philippine Accounting Standards (PAS) and Philippine Interpretations from
International Financial Reporting Interpretations Committee (IFRIC) issued by the Philippine Financial Reporting
Standards Council and adopted by the SEC, including SEC pronouncements.

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Note 3 – Summary of Changes in PFRS

Adoption of New and Amended PFRS

The accounting policies adopted are consistent with those of the previous financial year, except for the adoption
of the following new and amended PFRS, which are effective for annual periods beginning on or after January 1,
2016:

 Amendment to PAS 1, Presentation of Financial Statements: Disclosure Initiative – The amendment clarifies
guidance on materiality and aggregation, the presentation of subtotals, the structure of financial statements
and the disclosure of accounting policies.

 Amendment to PAS 16, Property, Plant and Equipment – Clarification of Acceptable Methods of
Depreciation, and PAS 38, Intangible Assets - Clarification of Acceptable Methods of Amortization – The
amendments clarify that (i) the use of revenue-based methods to calculate the depreciation of an assets is not
appropriate because revenue generated by an activity that includes the use of an assets generally reflects
factors other than the consumption of economic benefits embodied in the assets, and (ii) revenue is generally
presumed to be an inappropriate basis for measuring the consumption of economic benefits embodied in an
intangible assets, however, this presumption can be rebutted in certain limited circumstances.

 Amendments to PAS 19, Employee Benefits – Discount Rate: Regional Market Issue – The amendment
clarifies that in determining the discount rate for post-employment benefit obligation, it is the currency that
the liabilities are denominated in that is important, and not the country where they arise. Thus, the assessment
of whether there is a deep market in high quality corporate bonds is based on corporate bonds in that currency
(not corporate bonds in a particular country), and in the absence of a deep market in high quality corporate
bonds in that currency, government bond in the relevant currency should be used.

The adoption of the foregoing new and amended PFRS did not have any material effect on the financial
statements. Additional disclosures have been included in the notes to financial statements, as applicable.

New and Amended PFRS Not Yet Effective

Relevant new and amended PFRS which are not yet effective for the year ended December 31, 2016 and have not
been applied in preparing the financial statements are summarized below.

Effective for annual periods beginning on or after January 1, 2017:

 Amendments to PAS 7, Statement of Cash Flows – Disclosure Initiative – The amendments require entities
to provide information that enable the users of financial statements to evaluate changes in liabilities arising
from financing activities.

 Amendments to PAS 12, Income Taxes – Recognition of Deferred Tax Assets for Unrealized Losses - The
amendment clarifies the accounting for deferred tax assets related to unrealized losses on debt instruments
measured at fair value, to address diversity in practice.

Effective for annual periods beginning on or after January 1, 2018:

 PFRS 9, Financial Instruments – This standard will replace PAS 39 (and all the previous versions of PFRS 9).
It provides requirements for the classification and measurement of financial assets and financial liabilities,
impairment, hedge accounting and derecognition.

PFRS 9 requires all recognized financial assets to be subsequently measured at amortized cost or fair value
(through profit or loss or through other comprehensive income), depending on their classification by
reference to the business model within which they are held and their contractual cash flow characteristics.

For financial liabilities, the most significant effect of PFRS 9 relates to cases where the fair value option is
taken: the amount of change in fair value of a financial liability designated as at fair value through profit or
loss that is attributable to changes in the credit risk of that liability is recognized in other comprehensive
income (rather than in profit or loss), unless this creates an accounting mismatch.
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 For the impairment of financial assets, PFRS 9 introduces an “expected credit loss” model based on the
concept of providing for expected losses at inception of a contract; it will be no longer necessary for objective
evidence of impairment before a credit loss is recognized.

For hedge accounting, PFRS 9 introduces a substantial overhaul allowing financial statements to better reflect
how risk management activities are undertaken when hedging financial and non-financial risk exposures.

The derecognition provisions are carried over almost unchanged from PAS 39.

 PFRS 15, Revenue from Contracts with Customers - It establishes a single and comprehensive framework
for revenue recognition to apply consistently across transactions, industries and capital markets, with a core
principle (based on a five-step model to be applied to all contracts with customers), enhanced disclosures,
and new or improved guidance (e.g. the point at which revenue is recognized, accounting for variable
consideration, costs of fulfilling and obtaining a contract, and others.).

Effective for annual periods beginning on or after January 1, 2019:

 PFRS 16, Leases – Significant change introduced by the new standard is that almost all leases will be brought
onto lessees’ balances sheets under a single model (except leases of less than 12 months and leases of low-
value assets), eliminating the distinction between operating and finance leases. Lessor accounting, however,
remains largely unchanged and the distinction between operating and finance lease is retained.

Under prevailing circumstances, the adoption of the foregoing new and revised PFRS is not expected to have any
material effect on the financial statements of the Company. Additional disclosures will be included in the
financial statements, as applicable.

Note 4 – Summary of Significant Accounting and Financial Reporting Policies

The significant accounting policies that have been used in the preparation of these financial statements are
summarized below. These policies have been consistently applied to all the years presented, unless otherwise
stated.

Financial Assets and Financial Liabilities

Date of Recognition. The Company recognizes a financial asset or financial liability in the statements of financial
position when it becomes a party to the contractual provisions of the financial instrument. In the case of a regular
way purchase or sale of financial assets, recognition and derecognition, as applicable, is done using settlement
date accounting.

Initial Recognition. Financial assets and liabilities are recognized initially at fair value, which is the fair value of
the consideration given (in case of an asset) or received (in case of a liability). The initial measurement of
financial instruments, except for those designated at fair value through profit and loss (FVPL), includes
transaction cost.

Classification. The Company classifies its financial instruments into the following categories: financial assets
and financial liabilities at FVPL, held-to-maturity (HTM) investments, available-for-sale (AFS) financial assets,
loans and receivables and other financial liabilities. The classification depends on the purpose for which the
financial instruments were acquired or incurred and whether or not the financial instruments are quoted in an
active market. Management determines the classification of its financial assets and financial liabilities at initial
recognition and, where allowed and appropriate, re-evaluates such designation at every reporting date.

The Company’s financial assets are in the nature of loans and receivables. As at December 31, 2017 and 2016,
the Company has no financial assets designated as at FVPL, AFS financial assets or HTM investments. The
Company’s financial liabilities are in the nature of other financial liabilities. The Company has no financial
liabilities designated as at FVPL as at December 31, 2017 and 2016.
‘Day 1’ Difference. Where the transaction in a non-active market is different from the fair value of other
observable current market transactions in the same instrument or based on a valuation technique whose variables
include only data from observable market, the Company recognizes the difference between the transaction price
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and fair value (a “Day 1” difference) in profit or loss unless it qualifies for recognition as some other type of asset.
In cases where there are no observable data on inception, the Company deems the transaction price as the best
estimate of fair value and recognizes “Day 1” difference in profit or loss when the inputs become observable or
when the instrument is derecognized. For each transaction, the Company determines the appropriate method of
recognizing the “Day 1” difference.

Loans and Receivables. Loans and receivables are financial assets with fixed or determinable payments and
maturities that are not quoted in an active market. These are not entered into with the intention of immediate or
short-term resale and are not designated as AFS financial assets or financial asset at FVPL. Loans and receivables
are included in current assets if maturity is within twelve months from reporting date. Otherwise, these are
classified as noncurrent assets.

Subsequent to initial measurement, loans and receivables are subsequently measured at amortized cost using the
effective interest method, less allowance for impairment losses. Amortized cost is calculated by taking into
account any discount or premium and any transaction cost which are directly attributable in the acquisition of the
financial instrument. The amortization is included in profit or loss.

This category includes cash, trade and other receivables, advances to employees and other advances included
under other current assets, and advances to affiliates included under other noncurrent assets as at December 31,
2017 and 2016.

Other Financial Liabilities. This category pertains to financial liabilities that are not held for trading or not
designated as at FVPL upon the inception of the liability. These include liabilities arising from operations and
exclude other liabilities covered by other accounting standards, such as income tax payable. The financial
liabilities are recognized initially at fair value and are subsequently carried at amortized cost, taking into account
the impact of applying the effective interest method of amortization (or accretion) for any related premium,
discount and any directly attributable transaction costs.

This category includes trade and other payables (excluding statutory payables) and loans payable as at December
31, 2017 and 2016.

Impairment of Financial Assets

The Company assesses at each reporting date whether there is objective evidence that a financial asset or a group
of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and
only if, there is objective evidence of impairment as a result of one or more events that have occurred after the
initial recognition of the asset (an incurred loss event) and that loss event has an impact on the estimated future
cash flows of the financial asset or the group of financial assets that can be reliably estimated. Objective evidence
includes observable data that comes to the attention of the Company about loss events such as but not limited to
significant financial difficulty of the counterparty, a breach of contract, such as a default or delinquency in interest
or principal payments, probability that borrower will enter bankruptcy or other financial reorganization.

Assets Carried at Amortized Cost. For financial assets carried at amortized cost, the Company first assesses
whether objective evidence of impairment exists individually for financial assets that are individually significant,
or collectively for financial assets that are not individually significant. If it is determined that no objective
evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is
included in a group of financial assets with similar credit risk characteristics and that group of financial assets is
collectively assessed for impairment. Those characteristics are relevant to the estimation of future cash flows for
groups of such assets by being indicative of the debtor’s ability to pay all amounts due according to the contractual
terms of the assets being evaluated. Assets that are individually assessed for impairment and for which an
impairment loss is, or continues to be recognized, are not included in the collective impairment assessment.

If there is objective evidence that an impairment loss has been incurred, the amount of loss is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash flows discounted
at the financial asset’s original effective interest rate. Time value is generally not considered when the effect of
discounting the cash flows is not material.

The carrying amount of the asset shall be reduced directly or through the use of an allowance account. The amount
of impairment loss shall be recognized in profit or loss. If, in a subsequent period, the amount of the estimated
impairment loss decreases because of an event occurring after the impairment was recognized, the previously

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recognized impairment loss is reduced by adjusting the allowance account. Any subsequent reversal of an
impairment loss is recognized in profit or loss, to the extent that the carrying value of the asset does not exceed
its amortized cost at the reversal date.

AFS Financial Assets. For equity instruments carried at fair value, the Company assesses, at each reporting date,
whether objective evidence of impairment exists. Objective evidence of impairment includes a significant or
prolonged decline in the fair value of an equity instrument below its cost. ‘Significant’ is evaluated against the
original cost of the investment and ‘prolonged’ is evaluated against the period in which the fair value has been
below its original cost. The Company generally regards fair value decline as being significant when the decline
exceeds 25%. A decline in a quoted market price that persists for 12 months is generally considered to be
prolonged.

If an AFS financial asset is impaired, an amount comprising the difference between the cost (net of any principal
payment and amortization) and its current fair value, less any impairment loss on that financial asset previously
recognized in profit or loss, is transferred from equity to profit or loss. Reversals of impairment losses in respect
of equity instruments classified as AFS financial assets are not recognized in profit or loss. Reversals of
impairment losses on debt instruments are recognized in profit or loss, if the increase in fair value of the instrument
can be objectively related to an event occurring after the impairment loss was recognized in profit or loss.

In the case of an unquoted equity instrument or of a derivative asset linked to and must be settled by delivery of
an unquoted equity instrument, for which its fair value cannot be reliably measured, the amount of impairment
loss is measured as the difference between the asset’s carrying amount and the present value of estimated future
cash flows from the asset discounted at the current market rate of return for a similar financial asset. Such
impairment loss shall not be reversed.

Derecognition of Financial Assets and Financial Liabilities

Financial Assets. A financial asset or, where applicable, a part of a financial asset or part of a group of similar
financial assets is derecognized when:

 the rights to receive cash flows from the asset have expired; or

 the Company retains the rights to receive cash flows from the asset, but has assumed an obligation to
pay them in full without material delay to a third party under a “pass-through” arrangement; or

 the Company has transferred its right to receive cash flows from the asset and either: (a) has transferred
substantially all the risks and rewards of the asset; or (b) has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control of the asset.

Where the Company has transferred its right to receive cash flows from an asset and has neither transferred nor
retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is
recognized to the extent of the Company’s continuing involvement in the asset. Continuing involvement that
takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount
of the asset and the maximum amount of consideration that the Company could be required to repay.

Financial Liabilities. A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or expired. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognized in profit or loss.

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Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial
position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is
an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. This is not
generally the case with master netting agreements, and the related financial assets and financial liabilities are
presented gross in the statement of financial position.

Fair Value Measurement

An analysis of the fair values of financial instruments and further details as to how they are measured are provided
in Note 25.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset
or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The
principal or most advantageous market must be accessible to the Company.

The fair value of an asset or liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their best economic interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:

 Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

 Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.

 Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based
on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting
period.

The fair value of financial instruments that are actively traded in organized financial markets is determined by
reference to quoted market close prices at the close of business on the end of the reporting period.

For financial instruments where there is no active market, fair value is determined using valuation techniques.
Such techniques include comparison to similar investments for which market observable prices exist and
discounted cash flow analysis or other valuation models.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis
of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.

Inventories
Inventories are valued at the lower of cost and net realizable value (NRV). The costs of materials and merchandise
inventories are determined using the moving average cost method. NRV of merchandise is the estimated selling

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price in the ordinary course of business, less estimated costs necessary to make the sale. NRV of materials is the
current replacement cost.

Prepaid Expenses
Prepayments are expenses paid in advance and recorded as asset before they are utilized. This account comprise
of prepaid rent. Prepaid rent are apportioned over the period covered by the payment and charged to the
appropriate account in profit or loss when incurred.

Prepayments that are expected to be realized for no more than twelve months after reporting date are classified as
other current assets; otherwise these are classified as other noncurrent assets.

Property and Equipment

Property and equipment is stated at cost, excluding the costs of day-to-day servicing, less accumulated
depreciation and impairment in value, if any. Such cost includes the cost of replacing part of such property and
equipment when that cost is incurred, if the recognition criteria are met.

The initial cost of property and equipment comprises its purchase price and any directly attributable costs of
bringing the asset to its working condition and location for its intended use. Such cost includes the cost of
replacing part of such property and equipment when that cost is incurred if the recognition are met. It excludes
the cost of day-to-day servicing.

Depreciation commences when an item of property and equipment becomes available for its intended use.
Depreciation is computed using the straight-line method, net of any residual value, over the estimated useful lives
of the property and equipment as follows:

Category Years
Factory tools and equipment 20 years
Building and improvements 20 years
Transportation equipment 5 years
Office equipment 5 years

If there is any indication that there has been a significant change in the depreciation rate, useful life or residual
value of an asset, the depreciation of that asset is revised prospectively to reflect the new expectations.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising from derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in
the year the asset is derecognized. Fully depreciated assets are retained in the accounts until they are no longer
in use.

At each reporting date, property and equipment is reviewed for impairment to determine whether there is any
indication that these assets have suffered an impairment loss. If there is an indication of possible impairment, the
recoverable amount of any property and equipment is estimated and compared with its carrying amount. If
estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and
an impairment loss is recognized immediately in profit or loss.

Impairment of Nonfinancial Assets

The carrying amount of property and equipment, investment properties and other noncurrent assets are reviewed
for impairment when events or changes in circumstances indicate that the carrying amount may not be
recoverable. The Company assesses at each reporting date whether there is an indication that an asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company
makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s
or cash-generating unit’s fair value less costs of disposal and its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognized
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in the statements of comprehensive income in those expense categories consistent with the function of the
impaired asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognized
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount
is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the
case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognized for the asset in prior years. Such reversal is recognized in statements of comprehensive income unless
the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such
a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less
any residual value, on a systematic basis over its remaining useful life.

Borrowing Costs
Borrowing costs that are directly attributable to the development, construction or production of a qualifying asset
that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part
of the asset. Capitalization of borrowing costs commences when activities to prepare the asset are in progress
and expenditures and borrowing costs are being incurred. Capitalization ceases when substantially all the
activities necessary to prepare the asset for its intended use or sale are complete. Borrowing costs consist of
interest and other financing costs that the Company incurs in connection with the borrowing of funds.

All other borrowing costs are recognized and charged to profit or loss as incurred.

Equity
Capital Stock. Capital stock represents par value of the issued shares. Incremental costs directly attributable to
the issuances of capital stock are recognized as a deduction from equity.

Retained Earnings. Retained earnings represent the cumulative balance of net income or loss, dividend
distributions, effects of the changes in accounting policy and other capital adjustments. Appropriated retained
earnings represent that portion which has been restricted and are not available for any dividend declaration.
Unappropriated retained earnings represent that portion which can be declared as dividends to stockholders.

Dividend Distribution. Dividend distribution to the stockholders is recognized as a liability and deducted from
equity in the year in which the dividends are approved by the BOD. Dividends that are approved after the
reporting year are dealt with as an event after the end of the reporting year.

Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue
is recognized:

Sale of Finished Goods. Revenue from sale of goods in the course of ordinary activities is measured at the fair
value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is
recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, which is
normally upon delivery, and the amount of revenue can be measured reliably.

Interest Income. Interest income from bank deposits and short-term cash placements is recognized on a time
proportion basis on the principal outstanding and at the rate applicable. Interest income is recognized as the
interest accrues, taking into account the effective yield on the asset.

Cost and Expenses Recognition

Costs and expenses are recognized upon receipt of goods, utilization of services or at the date they are incurred.

Expenses are also recognized when a decrease in future economic benefit related to a decrease in an asset or an
increase in a liability that can be measured reliably has arisen. Expenses are recognized on the basis of a direct
association between costs incurred and the earning of specific items of income; on the basis of systematic and
rational allocation procedures when economic benefits are expected to arise over several accounting periods and
the association can only be broadly or indirectly determined; or immediately when an expenditure produces no

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future economic benefits or when, and to the extent that future economic benefits do not qualify, or cease to
qualify, for recognition as an asset.

Costs of Sales. Costs of sales are recognized upon sale of goods.

Operating Expenses. Operating expenses are recognized in the statement of comprehensive income upon
utilization of the goods or services or at the date they are incurred.

Interest expense. Interest expense is recognized as the interest accrues using the effective interest rate method.

Employee Benefits
Short-term Employee Benefits. Short-term employee benefits are expensed as the related service is provided. A
liability is recognized for the amount expected to be paid if the Company has a present legal or constructive
obligation to pay this amount as a result of past service provided by the employee and the obligation can be
estimated reliably. The Company provides short-term benefits to its employees in the form of basic 13th month
pay, bonuses, employer’s share on government contribution, and other short-term benefits.

Retirement Cost. The Company has a funded, noncontributory defined benefit plan covering all qualified
employees. The cost of providing benefits under the defined benefit retirement plan is actuarially determined
using the projected unit credit method. Projected unit credit method reflects services rendered by employees to
the date of valuation and incorporates assumptions concerning employees’ projected salaries. Actuarial gains and
losses are recognized in full in the period in which they occur in other comprehensive income. Such actuarial
gains and losses are also immediately recognized in equity and are not reclassified to profit or loss in subsequent
period.

The net defined benefit retirement liability or asset is the aggregate of the present value of the amount of future
benefit that employees have earned in return for their service in the current and prior periods, reduced by the fair
value of plan assets (if any), adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The
asset ceiling is the present value of economic benefits available in the form of reductions in future contributions
to the plan.

Defined benefit costs comprise the following:

 Service costs
 Net interest on the defined benefit retirement liability or asset
 Remeasurements of defined benefit retirement liability or asset

Service costs which include current service costs, past service costs and gains or losses on non-routine settlements
are recognized as expense in profit or loss. Past service costs are recognized when plan amendment or curtailment
occurs. These amounts are calculated periodically by independent qualified actuary using the projected unit credit
method.

Net interest on the defined benefit retirement liability or asset is the change during the period as a result of
contributions and benefit payments, which is determined by applying the discount rate based on the government
bonds to the defined benefit retirement liability or asset. Net interest on the defined benefit retirement liability or
asset is recognized as expense or income in profit or loss.

Remeasurements of net defined benefit retirement liability or asset comprising actuarial gains and losses, return
on plan assets, and the effect of the asset ceiling (excluding net interest) are recognized immediately in other
comprehensive income in the period in which they arise.

When the benefits of a plan are changed, or when a plan is curtailed, the resulting change in benefit that relates
to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company
recognizes gains and losses on the settlement of a defined benefit retirement plan when the settlement occurs.

Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded using the exchange rate at the date of the transaction.
Outstanding monetary assets and liabilities denominated in foreign currencies are translated using the closing rate
of exchange at the end of the reporting year. Foreign exchange differences are credited or charged directly to
profit or loss.
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Income Taxes
Current Income Tax. Current tax assets and liabilities are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rate and tax laws used to compute the amount are those that have been
enacted or substantively enacted at the reporting date.

Deferred Income Tax. Deferred tax is provided on all temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized
for all deductible temporary differences, carryforward benefits of unused tax credits from the excess of minimum
corporate income tax (MCIT) over the regular corporate income tax (RCIT) and unused net operating loss
carryover (NOLCO), to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences and carryforward benefits of unused tax credits and unused tax losses can be
utilized. Deferred tax, however, is not recognized when it arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss.

Deferred tax liabilities are not provided on nontaxable temporary differences associated with investments in
domestic subsidiaries and interest in joint ventures.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to
be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rate that are expected to apply to the period when the
asset is realized or the liability is settled, based on tax rate and tax laws that have been enacted or substantively
enacted at the reporting date.

Deferred tax is recognized in profit or loss except to the extent that it relates to a business combination, or items
directly recognized to equity or in OCI.

Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Value Added Tax (VAT)

Revenues, expenses and assets are recognized net of the amount of VAT, except:

 where the tax incurred on a purchase of assets or services is not recoverable from the taxation authority,
in which case the tax is recognized as part of the cost of acquisition of the asset or as part of the expense item
as applicable; and
 receivables and payables that are stated with the amount of tax included.

The net amount of Input VAT is included as part of “Other Current Assets” in the statements of financial position.

Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement
and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific
asset or assets and the arrangement conveys a right to use the asset. A reassessment is made after the inception of
the lease only if one of the following applies:

(a) there is a change in contractual terms, other than a renewal or extension of the arrangement;
(b) a renewal option is exercised or an extension is granted, unless the term of the renewal or extension was
initially included in the lease term;
(c) there is a change in the determination of whether fulfillment is dependent on a specific asset; or
(d) there is a substantial change to the asset.

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Where a reassessment is made, lease accounting shall commence or cease from the date when the change in
circumstances gives rise to the reassessment for scenarios (a), (c) or (d), and at the date of renewal or extension
period for scenario (b) above.

Operating Lease - Company as Lessee. Leases which do not transfer to the Company substantially all the risks
and rewards of ownership of the asset are classified as operating leases. Operating lease payments are recognized
as an expense in profit or loss on a straight-line basis over the lease term. Associated costs such as maintenance
and insurance are expensed as incurred.

Related Party Transactions and Relationships

Related party relationships exist when one party has the ability to control, directly or indirectly, the other party
or exercise significant influence over the other party in making financial and operating decisions. Parties are also
considered to be related parties if they are subject to common control or common significant influence.

Transaction between related parties are accounted for at arms’ length prices or on terms similar to those offered
to non-related entities in an economically comparable market.

Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects
some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is
recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any
provision is presented in profit or loss net of any reimbursement. If the effect of the time value of money is
material, provisions are discounted using a current pretax rate that reflects, where appropriate, the risks specific
to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized
as a finance cost.

Contingencies
Contingent liabilities are not recognized in the financial statements. These are disclosed in the notes to financial
statements unless possibility of an outflow of resources embodying economic benefits is remote. Contingent
assets are not recognized in the financial statements but are disclosed in the notes to financial statements when an
inflow of economic benefits is probable.

Events After the End of the Reporting Date

Post year-end events that provide additional information on the Company’s financial position at the report date
(adjusting events), are reflected in the financial statements. Post year-end events that are not adjusting events are
disclosed in the notes to financial statements when material.

Note 5 – Significant Accounting Judgments, Estimates and Assumptions

The preparation of the financial statements in accordance with PFRS requires the management to make judgments,
estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes
to financial statements. The judgment, estimates and assumptions used in the financial statements are based upon
management’s evaluation of relevant factors and circumstances as of the date of the financial statements. Future
events may occur which will cause the assumptions used in arriving at the estimates to change. The effect of any
change in estimates will be reflected in the financial statements when they become reasonably determinable.

Judgements
In the process of applying the Company’s accounting policies, management has made the following judgments,
apart from those involving estimations, which have the most significant effect on the amounts recognized in the
financial statements:

Determination of the Functional Currency. Based on the economic substance of the underlying circumstances
relevant to the Company, management determined its functional currency to be Philippine Peso. It is the currency
that mainly influences the revenue, the costs of sales and operating expenses.

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Operating Lease. Operating Lease Commitments - Company as Lessee. The Company rents office and production
space under cancellable operating leases (Note 22). The Company has determined that it does not retain all the
significant risks and rewards of ownership of these properties.

Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation or uncertainty at the reporting
date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below:

Fair Value Measurement.A number of the Company’s accounting policies and disclosures require the
measurement of fair values for both financial and non-financial assets and liabilities. The Company has an
established control framework with respect to the measurement of fair values. This includes a valuation team that
has the overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party
information is used to measure fair values, then the valuation team assesses the evidence obtained to support the
conclusion that such valuations meet the requirements of PFRS, including the level in the fair value hierarchy in
which such valuations should be classified.

The Company uses market observable data when measuring the fair value of an asset or liability. Fair values are
categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques
(Note 25).

If the inputs used to measure the fair value of an asset or a liability can be categorized in different levels of the
fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair
value hierarchy based on the lowest level input that is significant to the entire measurement.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.

Estimating Allowance for Doubtful Accounts. The Company maintains allowance for doubtful accounts at a level
considered adequate to provide for potential uncollectible receivables. The level of this allowance is evaluated by
the management on the basis of factors that affect the collectability of the accounts. These factors include, but are
not limited to, the length of the Company’s relationship with the customers, customers’ current credit status based
on third party credit reports and known market factors, average age of accounts, collection experience and
historical loss experience. The Company reviews the age and status of the receivables, and identifies accounts
that are to be provided with allowance on a monthly basis. The Company also evaluates its receivables from a
portfolio perspective, to determine whether there are collective indicators of incurred loss. The Company
identifies and provides for specific accounts that are doubtful of collection and reviews the age and status of the
remaining receivables and establishes a provision considering, among others, historical collection and write-off
experience.

The allowance for doubtful accounts amounted to ₱112,430 and ₱103,430 as of December 31, 2017 and 2016,
respectively.

The carrying values of trade and other receivables amounted to ₱26,056,063 and ₱21,505,790 as of December
31, 2017 and 2016, respectively (Note 6).

Estimating Allowance for Inventory Obsolescence. The Company provides allowance for inventory obsolescence
whenever NRV of inventories becomes lower than cost due to damage, physical deterioration, obsolescence,
changes in price levels or other causes.

Estimates of net realizable value are based on the most reliable evidence available at the time the estimates are
made of the amount the inventories are expected to be realized. These estimates take into consideration
fluctuations of price or cost directly relating to events occurring after the reporting date to the extent that such
events confirm conditions existing at the reporting date. The allowance account is reviewed on a monthly basis
to reflect the accurate valuation in the financial records.

No allowance for inventory obsolescence was recognized in 2017 and 2016.

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The carrying values of inventories amounted to ₱15,325,230 and ₱12,783,518 as of December 31, 2017 and 2016,
respectively (Note 7).

Estimating Useful Lives of Property and Equipment. The estimated useful lives of each of the Company’s
property and equipment is estimated based on the period over which the asset is expected to be available for use.
The estimated useful life of each asset is reviewed periodically and 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 asset.

In addition, the estimation of the useful lives is based on collective assessment of industry practice, internal
technical evaluation and experience with similar assets. It is possible, however, that future financial performance
could be materially affected by changes in estimates brought about by changes in the factors mentioned above.
The amounts and timing of recorded expenses for any period would be affected by changes in these factors and
circumstances. A reduction in the estimated useful life of any property and equipment would increase the recorded
costs of goods sold and services and operating expenses and decrease noncurrent assets.

Property and equipment, net of accumulated depreciation amounted to ₱34,157,627 and ₱29,341,574 as of
December 31, 2017 and 2016, respectively. Accumulated depreciation of property and equipment amounted to
₱54,446,496 and ₱59,123,266 as of December 31, 2017 and 2016, respectively (Note 10).

Estimating Impairment of Nonfinancial Assets. Determining the value in use of nonfinancial assets require the
determination of future cash flows expected to be generated from the continued use and ultimate disposition of
such asset, require the Company to make estimates and assumptions that can materially affect its financial
statements. Future events could cause the Company to conclude that the nonfinancial assets are impaired. Any
resulting additional 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 Company’s assessment of recoverable values and may lead to
future additional impairment charges.

The carrying amounts of the Company’s nonfinancial assets as of December 31, 2017 and 2016 are disclosed in
Notes 10 and 11 to the financial statements.

Estimating Retirement Costs. The cost of defined benefit pension plan and the present value of the pension
obligation are determined using actuarial valuation. An actuarial valuation involves making various assumptions
that may differ from actual developments in the future. These include the determination of the discount rate, future
salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the
underlying assumptions and its longterm nature, a defined benefit obligation is highly sensitive to changes in
these assumptions.

All assumptions are reviewed at each reporting date.

The retirement liability as at December 31, 2017 and 2016 amounted to ₱3,372,204. Further details about the
assumptions used are disclosed in Note 20 of the financial statements.

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Note 6 – Trade and Other Receivables

The account at December 31 consisted of:

2017 2016
Trade receivable ₱ 25,934,998 ₱ 21,419,484
Other receivable 233,495 189,736
26,168,493 21,609,220
Allowance for doubtful accounts 112,430 103,430
₱ 26,056,063 ₱ 21,505,790

Trade and other receivables are non-interest bearing and are generally on a 30-60 days credit terms.

Movement in the allowance for doubtful accounts are as follows:

2017 2016
Beginning balance ₱ 103,430 ₱ -
Provision for bad debts 9,000 798,643
Write-off - (695,213)
₱ 112,430 ₱ 103,430

Note 7 – Inventories

The account at December 31 consisted of:

2017 2016
Finished goods (Note 15) ₱ 7,834,393 ₱ 6,067,767
Warehouse division (Note 15) 3,569,333 1,689,359
Raw materials (Note 15) 2,762,672 4,044,294
Work in process (Note 15) 1,158,832 982,098
₱ 15,325,230 ₱ 12,783,518

There are no allowance for inventory obsolescence for the years ended December 31, 2017 and 2016.

Note 8 – Prepaid Expenses

The account at December 31 consisted of:

2017 2016
Prepaid rent ₱ 52,632 ₱ 105,263
₱ 52,632 ₱ 105,263

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Note 9 – Other Current Assets

The account at December 31 consisted of:

2017 2016
Input tax ₱ 910,986 ₱ 776,582
Other advances 79,204 301,297
Advances to employees - 569,041
₱ 990,190 ₱ 1,646,920

Note 10 – Property and Equipment

The account at December 31 consisted of:

2017 2016
Factory tools and equipment ₱ 35,398,261 ₱ 40,315,100
Building and improvements 40,037,232 36,096,452
Transportation equipment 8,896,559 7,979,889
Office equipment 4,272,071 4,073,399
Total 88,604,123 88,464,840
Accumulated Depreciation (54,446,496) (59,123,266)
₱ 34,157,627 ₱ 29,341,574

Thus, a reconciliation of the carrying amounts at the beginning and end of 2017 and 2016 and the gross carrying
amounts and the accumulated depreciation of property and equipment are shown on the next page:

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 Factory Tools and Building and Transportation
Office Equipment Total
Equipment Improvements Equipment

Cost
As at December 31, 2015 ₱ 38,305,993 ₱ 29,037,999 ₱ 7,843,840 ₱ 1,991,330 ₱ 77,179,162
Additions 2016 2,009,107 7,058,453 1,108,329 2,082,069 12,257,958
Disposals 2016 - - (972,280) - (972,280)
As at December 31, 2016 40,315,100 36,096,452 7,979,889 4,073,399 88,464,840
Additions 2017 6,197,224 3,940,780 916,670 614,639 11,669,313
Disposals 2017 (11,114,063) - - (415,967) (11,530,030)
As at December 31, 2017 35,398,261 40,037,232 8,896,559 4,272,071 88,604,123
Accumulated Depreciation
As at December 31, 2014 26,981,035 16,989,045 3,336,675 1,563,040 48,869,795
Depreciation 2015 2,416,394 1,452,900 1,426,447 165,948 5,461,689
As at December 31, 2015 29,397,429 18,441,945 4,763,122 1,728,988 54,331,484
Depreciation 2016 2,405,041 1,810,454 1,329,980 218,587 5,764,062
Disposals 2016 - - (972,280) (972,280)
As at December 31, 2016 31,802,470 20,252,399 5,120,822 1,947,575 59,123,266
Depreciation 2017 2,618,889 2,203,337 1,172,886 858,148 6,853,260
Disposals 2017 (11,114,063) - - (415,967) (11,530,030)
As at December 31, 2017 23,307,296 22,455,736 6,293,708 2,389,756 54,446,496
₱ 12,090,965 ₱ 17,581,496 ₱ 2,602,851 ₱ 1,882,315 ₱ 34,157,627

Fully depreciated property and equipment still in used by the Company amounted to ₱19,026,557 and ₱5,187,276 as of December 31, 2017 and 2016, respectively.

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Note 11 – Other Noncurrent Assets

The account at December 31 consisted of:

2017 2016
Advances to affiliates (Note 21) ₱ 7,796,759 ₱ 7,796,759
Miscellaneous deposits 243,383 207,500
₱ 8,040,142 ₱ 8,004,259

Note 12 – Trade and Other Payables

The account at December 31 consisted of:

2017 2016
Trades payables ₱ 18,437,136 ₱ 9,029,194
Income tax payable 992,264 861,057
Other payables 386,176 212,441
Accrued expenses 550,456 1,033,603
₱ 20,366,032 ₱ 11,136,295

Trade payables are non-interest bearing and are generally settled on 30-60 days term.

Other payables primarily consist of amounts owed to canteen and employees fund and withholding tax
payable and are generally settledwithin 30-60 days.

Accrued expenses consist of government payables, manpower services, Meralco, PLDT, gasoline expenses
and security expenses.

Note 13 – Loans Payable

The account at December 31 consisted of:

2017
Loan Amount Interest Rate Date Availed Renewal
RCBC 17,651,050 3.03% 07/2017 07/2018
BPI 11,366,340 3.03% 01/02/2017 01/2018
₱ 29,017,390

2016
Loan Amount Interest Rate Date Availed Renewal
RCBC 9,608,290 3.03% 07/2016 07/2017
BPI 12,387,500 3.03% 01/02/2016 01/2017
₱ 21,995,790

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Movement in the principal amount are as follows:

2017 2016
Begining principal balance ₱ 21,995,790 ₱ 9,764,700
Availment of loans 21,724,650 34,160,290
Payment of loans (14,703,050) (21,929,200)
Ending principal balance ₱ 29,017,390 ₱ 21,995,790

Loans payable mainly represents unsecured peso denominated amounts obtained from local banks. Interest
ranges from 2% to 3.03% in 2017 and 2016. Interest expense amounted to ₱636,424 and ₱428,147 for 2017
and 2016 respectively (Note 17).

Note 14 – Revenue

The account at December 31 consisted of:

2017 2016
Revenue from printing ₱ 167,366,410 ₱ 110,530,037
Revenue from warehouse division 24,355,464 14,392,273
Total 191,721,874 124,922,310
Less: Sales return and allowances (293,682) (39,539)
₱ 191,428,192 ₱ 124,882,771

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Note 15 – Cost of Sales

The account at December 31, consist of:

2017 2016
MANUFACTURING DIVISION
Raw materials used
Raw materials Inventory, Jan 1 (Note 7) ₱ 4,044,294 ₱ 2,103,045
Net purchases–supplies and materials 64,545,033 40,918,565
Total 68,589,327 43,021,610
Raw materials inventory, Dec 31 (Note 7) (2,762,672) (4,044,294)
Raw materials used 65,826,655 38,977,316
Direct labor 21,649,730 17,768,556
Printing expenses
Depreciation (Notes 2 & 10) 6,039,018 5,596,040
Other services 10,334,434 3,899,692
Freight and handling 4,102,194 3,713,662
Power, light and water 1,847,949 1,642,211
SSS/pagibig/philhealth contributions 1,302,566 1,239,354
Bonus and 13th month pay 1,053,276 1,006,170
Insurance 275,373 290,701
Gas & oil 280,280 240,488
Printing 17,041,871 118,319
Processing fee - 32,103
Supplies - 11,500
Premium benefits 1,200,000 -
Total Printing Costs 130,953,346 74,536,112
Work in Process January 1 (Note 7) 982,098 1,810,546
Work in Process December 31 (Note 7) (1,158,832) (982,098)
Finished Goods Inventory – January 1 (Note 7) 6,067,767 3,722,717
Finished Goods Inventory – December 31 (Note 7) (7,834,393) (6,067,767)
₱ 129,009,986 ₱ 73,019,510
WAREHOUSING DIVISION
Inventory, January 1 (Note 7) ₱ 1,689,359 ₱ 2,500,453
Net purchases 22,200,563 10,003,617
Total Available 23,889,922 12,504,070
Inventory, December 31 (Note 7) (3,569,333) (1,689,359)
₱ 20,320,589 ₱ 10,814,711
₱ 149,330,575 ₱ 83,834,221

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Note 16 – Operating Expenses

The account at December 31 consisted of:

2017 2016
MANUFACTURING DIVISION
Salaries and wages 9,656,592 7,961,624
Transportation 3,791,565 3,641,061
Repairs and maintenance 4,065,522 3,536,027
Professional fees 3,429,841 3,010,649
Stationeries and office supplies 634,608 2,482,078
Other services 4,135,618 2,049,003
Processing fee 2,582,869 1,448,894
Pension benefit - 1,200,000
Rental 1,107,599 945,440
Representation 749,636 728,556
Bonus and 13th month pay 810,237 727,553
Fringe benefit tax 1,255,577 708,288
Employees benefits 587,095 661,238
Fuel and oil 771,284 601,576
Telephone, telegraph, and postage 493,401 503,257
Power, light and water 455,922 391,504
SSS, Pagibig & philhealth contributions 417,504 380,597
Insurance expense 206,303 222,219
Depreciation (Notes 2 & 10) 807,042 160,822
Membership dues 128,124 132,524
Bank charges 88,879 88,496
Taxes and licenses 55,125 43,537
Trainings and seminar 1,850 20,860
Advertising expense 18,000 18,000
Penalty and charges 40,176 4,391
Donation 3,120 3,000
₱ 36,293,489 ₱ 31,671,194
WAREHOUSING DIVISION
Freight and handling ₱ 299,226 ₱ 1,464,510
Salaries and wages 616,364 561,816
Insurance expense 26,808 117,312
Bonus and 13th month pay 97,382 93,400
Processing fee 311,834 89,610
Permit, taxes and licenses 111,429 66,231
Employees benefits 32,324 42,948
Training and seminar - 27,858
Transportation and travel 11,379 7,244
Depreciation (Notes 2 & 10) 7,200 7,200
Power, light and water 6,000 6,000
₱ 1,519,946 ₱ 2,484,129
₱ 37,813,435 ₱ 34,155,323

- 20 -
Note 17 – Other Income (Expense)

The account at December 31 consisted of:

2017 2016
Interest income ₱ 15,909 ₱ 12,250
Gain on disposal of property and equipment - 236,607
Interest expense (Note 13) (636,424) (428,147)
Net foreign exchange loss (893,072) (604,363)
₱ (1,513,587) ₱ (783,653)

Note 18 - Income Taxes

The Company’s entitlement to avail of income tax holiday expired last March 31, 2005. Thus, payment of 5%
final tax on gross income as provided in Section 24 of RA 7916 and Rule XX of the rules and regulations to
implement RA 7916 was made to compute and pay the income tax due.

The Company has filed an application to become an Ecozone Logistics Service Enterprise to provide
warehousing/logistics services to various PEZA and/or Board of Investment (BOI) registered export enterprises
with valid Custom Bonded Warehouses (CBWs) at Carmelray Industrial Park II – Special Economic Zone
(CPIP II-SEZ) on July 15, 2009. The tax for this operation is computed on statutory tax rate of 30% or 2%
MCIT based on Gross profit whichever is higher. The statutory tax is higher than MCIT.

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The reconciliation of income tax computation is summarized as follows:

2017 2016
Revenue – Manufacturing (Note 14) ₱ 167,366,410 ₱ 110,530,037
Less returns and allowances (Note 14) 293,682 39,539
167,072,728 110,490,498
Cost of sales (Note 15) 129,009,986 73,019,510
Gross profit 38,062,742 37,470,988
Tax due (5% on Gross profit) 1,903,137 1,873,549
Tax due - Manufacturing (Share of other agency) 761,255 749,420
Amount already paid 597,236 480,095
Tax payable - Manufacturing (Share of other agency) 164,019 269,325
Tax due - Manufacturing (Share of BIR) 1,141,882 1,124,129
Less Creditable withholding tax 4,824 11,340
Previous payments 1,063,292 849,087
Total tax credits 1,068,116 860,427
Tax payable - Manufacturing (Share of BIR) 73,766 263,702
Revenue - Warehousing Division (Note 14) 24,355,464 14,392,273
Cost of sales - Warehousing Division (Note 15) 20,320,589 10,814,711
Gross profit - Warehousing Division 4,034,875 3,577,562
Operating expenses - Warehousing Division (Note 16) 1,519,946 2,484,129
Taxable income 2,514,929 1,093,433
MCIT (2% of Gross Income) 80,698 71,551
Statutory tax (30% on Net income before tax) 754,479 328,030
Tax due - Warehousing Division 754,479 328,030
Total tax due - Manufacturing and Warehousing Division 2,657,616 2,201,579
Total Tax payable (BIR) 828,245 591,732
Tax payable (Other agency) 164,019 269,325
Total Tax Payable ₱ 992,264 ₱ 861,057

Tax Reform for Acceleration and Inclusion Act (TRAIN)

Republic Act No.10963 or the TRAIN was signed into law on December 19, 2017 and took effect January 1,
2018, making the new tax law enacted as of the reporting date. Although the TRAIN changes existing tax
law and includes several provisions that will generally affect businesses on a prospective basis, the
management assessed that the same will not have any significant impact on the financial statement balances
as of the reporting date.

Note 19 – Employee Benefits

Employee benefits include short term employee benefits such as salaries and wages, 13 thmonth pay and meals
subsidies, social securities contributions, paid annual leave and paid sick leave and uniforms. Additional
medical care and transportation benefits were given to the regular employees.

Note 20 – Retirement Benefits

The Company has a funded, non-contributory, defined benefit retirement plan covering the Company’s
regular employees. The benefits are based on the employee’s final monthly salary as at the date of retirement
multiplied by the number of credited years of service.

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The Company accrues retirement cost of its regular employees based on estimated cost of retirement benefit
required under Republic Act (RA) No. 7641 Retirement Law.

- 23 -
The Company’s retirement liability is based on an actuarial valuation dated January 1, 2014 as follows:

2017 2016
Retirement liability ₱ 3,372,204 ₱ 3,372,204
Retirement asset 721,921 3,755,600
Present value of defined benefit obligation ₱ 4,094,125 ₱ 7,127,804
Past service liability 1,200,000 1,266,321
Fair value of plan assets ₱ 5,294,125 ₱ 8,394,125

The components of retirement expense recognized in the statements of comprehensive income for the years
2017 and 2016 are as follows:

2017 2016
Retirement expense ₱ 1,200,000 ₱ 1,200,000

Movement in the present value of the retirement liability as of December 31, 2017 and 2016 are as follows:

2017 2016
Balance at beginning of year ₱ 3,372,204 ₱ 3,372,204
Retirement expense 1,200,000 1,200,000
Past service amortization - 953,720
Funding of retirement (1,200,000) (2,153,720)
Balance at end of year ₱ 3,372,204 ₱ 3,372,204

The principal assumptions used in determining the pension liability of the Company for 2017 and 2016 are
as follows:

Average age of employees 32.70

Average remaining years of service 27.30
Discount rate 5%

Note 21 – Related Party Transactions`

Parties are considered related if one party has control, joint control, and significant influence over the other
party in making financial and operating decisions. The key management personnel of the Company and post-
employment benefit plans for the benefit of Company’s employees are also considered to be related parties.

Transactions between related parties are accounted for at arm’s-length prices or on terms similar to those
offered to non-related entities in an economically compatible market.

Transactions with Related Parties

The Company has related party transactions recorded as advances to affiliates, non-interest bearing,
amounting to ₱7,796,759 for the years ended 2017 and 2016 (Note 11). The account was recorded as other
noncurrent assets.

The Company leases its office and factory premises from Migu Landholdings Inc. with Ms. Mieko Yamada
as president. The lease term is yearly effective upon signing the original lease agreement in December 1998
and renewable every year upon mutual agreement. Total rental expense amounted to ₱1,107,599 and
₱945,440 for the years ended December 31, 2017 and 2016, respectively (Notes 16 and 22).

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Transactions with Key Management Personnel
The compensation of the Company’s key management personnel consisted mainly of salaries and benefits
aggregating to ₱4,769,005 and ₱4,769,005 for the years 2017 and 2016, respectively.

Note 22 – Lease Agreement

a) The Company has an existing lease agreement with Migu Landholdings and Realty Inc. for its office
space and production. The lease term is yearly effective upon signing the original lease agreement in
December 1998 and renewable upon mutual agreement of both parties.

b) Total rent expense charged to operations arising from these lease contracts amounted to ₱1,107,599 and
₱945,440 and in 2017 and 2016(Notes 16 and 21).

The total future minimum lease payments are as follows:

One year ₱ 1,107,599

More than one year but less than five years 4,430,396
₱ 5,537,995

Note 23 – Cash Dividend

On March 6, 2015, the Board of Directors declared cash dividends amounting to ₱15,000,000.

No dividends were declared for the years ended 2017 and 2016.

Note 24 – Financial Risk Management Objectives and Policies

The Company’s principal financial instruments consist of cash, trade and other receivales, trade and other
payables and loans payable. The main purpose of these financial instruments is to finance the Company’s
operations. The Company has various other financial instruments such as trade and other receivables and
trade and other payables, which arise directly from its operations. It is, and has been throughout the year
under review, the Company’s policy that no trading in financial instruments shall be undertaken.

The main risks arising from the Company’s financial instruments are interest rate risk, liquidity risk and
credit risk. The BOD reviews and approves the policies for managing each of these risks and they are
summarized below:

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Company’s exposure to interest rate risk relates to the
Company’s loans payable under China Banking Corporation which is in the form of bank overdraft subject
to floating interest rate based on the bank’s overnight rates ranging from 0.7% to 0.8% in 2017 and 2016 and
from short term borrowings with interest rates ranging from 2% to 3.03% in 2017 and 2016.

- 25 -
The Company’s policy is to manage interest risk by negotiating the most reasonable rate for the next quarter.
The following table demonstrates thesensitivity to a reasonably possible change in interest rates in the next
reporting period, with allother variables held constant, of the Company’s profit before tax:

Effect on profit before tax

2017 2016
1 % increase ₱ 290,174 ₱ 219,958
1% decrease ₱ (290,174) ₱ (219,958)

Credit Risk

Credit risk is the risk that a counterparty will not meet its obligation under a financial instrument or customer
contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities
(primarily trade receivables) and from its financing activities, including deposits with banks.

The Company’s credit risk for its cash and receivables are generally concentrated on possible default of the
counterparty, with a maximum exposure equal to the carrying amounts of these instruments. The risk is
mitigated by the short-term and/or liquid nature of its cash and receivables. The Company’s cash are mainly
in bank deposits, which are placed with financial institutions of high credit standing.

The Company trades only with recognized, creditworthy third parties. It is the Company’s policy that all
customers who wish to trade on credit terms are subject to credit verification procedures. In addition,
receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad
debts is not significant.

With respect to the other financial instruments of the Company, the exposure to credit risk arises from default
of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

The following table provides information regarding the maximum exposure of the Company’s financial
assets as of December 31, 2017 and 2016:

2017 2016
Cash ₱ 14,194,602 ₱ 9,064,846
Trade and other receivables 26,056,063 21,505,790
Other current assets
Advances to employees - 569,041
Other advances 79,204 301,297
Other noncurrent assets
Advances to affiliates 7,796,759 7,796,759
₱ 48,126,628 ₱ 39,237,733

- 26 -
The table below shows an aging analysis of the Company’s financial assets.

December 31, 2017

Past due but not impaired
Neither past due nor more
Impaired Total
impaired 91-120 121-180 than 180
61-90 days days days days
Cash ₱ 14,194,602 ₱ - ₱ - ₱ - ₱ - ₱ - ₱ 14,194,602
Trade and other
receivables 25,943,633 - - - - 112,430 26,056,063
Other current assets
Other advances 79,204 - - - - - 79,204
Other noncurrent assets
Advances to affiliates 7,796,759 - - - - - 7,796,759
₱ 48,014,198 ₱ - ₱ - ₱ - ₱ - ₱ 112,430 ₱ 48,126,628

December 31, 2016

Past due but not impaired
Neither past due nor
Impaired Total
impaired 91-120 121-180 more than
61-90 days days days 180 days
Cash ₱ 9,064,846 ₱ - ₱ - ₱ - ₱ - ₱ - ₱ 9,064,846
Trade and other
receivables 21,609,220 - - - - (103,430) 21,505,790
Other current assets
Advances to employees 569,041 - - - - - 569,041
Other advances 301,297 - - - - - 301,297
Other noncurrent assets
Advances to affiliates 7,796,759 - - - - - 7,796,759
₱ 39,341,163 ₱ - ₱ - ₱ - ₱ - ₱ (103,430) ₱ 39,237,733

The table below shows the credit quality of the Company’s financial assets based on their historical
experience with the corresponding third parties:

December 31, 2017

Neither past due nor impaired Past due or
Total
Grade A Grade B Grade C impaired
Cash ₱ 14,194,602 ₱ - ₱ - ₱ - ₱ 14,194,602
Trade and other
receivables 633 - - (103,430) (102,797)
Other current assets
Other advances 79,204 - - - 79,204
Other noncurrent assets
Advances to affiliates 7,796,759 - - - 7,796,759
₱ 22,071,198 ₱ - ₱ - ₱ (103,430) ₱ 21,967,768

- 27 -
 December 31, 2016
Neither past due nor impaired Past due or
Total
Grade A Grade B Grade C impaired
Cash ₱ 9,064,846 ₱ - ₱ - ₱ - ₱ 9,064,846
Trade and other
receivables 21,609,220 - - (103,430) 21,505,790
Other current assets
Advances to employees 569,041 - - - 569,041
Other advances 301,297 - - - 301,297
Other noncurrent assets
Advances to affiliates 7,796,759 - - - 7,796,759
₱ 39,341,163 ₱ - ₱ - ₱ (103,430) ₱ 39,237,733

Grade A receivables pertain to those receivables from clients or customers that consistently pay before the
maturity date. Grade B receivables include receivables that are collected on their due dates even without an
effort from the Company to follow them up. Receivables which are collected on their due dates provided
that the Company made a persistent effort to collect them are included under Grade C receivables. Past due
receivables include those that are past due but are still collectible.

Liquidity Risk

The Company monitors its risk to a shortage of funds by overseeing the liquidity and funding requirements
of its operations. The Company’s objective is to maintain a balance between continuity of funding and
flexibility through the use of bank loans and extension of suppliers’ credit. The Company holds various
deposits in the Company’s bank accounts that can be used to meet its liquidity needs. The Company also has
a credit facility with financial institutions that allows it to obtain funds as needed.
The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual
undiscounted payments:

December 31, 2017

More
than 6
More
3 to 5 5 to 6 months
On demand Less than 3 months than 1 Total
months months but less
year
than 1
year
Trade and other
payables
Trade payables ₱ - ₱ 17,705,323 ₱ - ₱ - ₱ - ₱ - ₱ 17,705,323
Accrued expenses 283,440 - - - - - 283,440
Loans payable 29,017,390 - - - - - 29,017,390
₱ 29,300,830 ₱ 17,705,323 ₱ - ₱ - ₱ - ₱ - ₱ 47,006,153

December 31, 2016

More than
3 to 5 5 to 6 6 months More than
On demand Less than 3 months Total
months months but less 1 year
than 1 year
Trade and other
payables
Trade payables ₱ - ₱ 9,029,194 ₱ - ₱ - ₱ - ₱ - ₱ 9,029,194
Accrued expenses 1,033,603 - - - - - 1,033,603
Loans payable 21,995,790 - - - - - 21,995,790
₱ 23,029,393 ₱ 9,029,194 ₱ - ₱ - ₱ - ₱ - ₱ 32,058,587

- 28 -
Note 25 – Fair Value of Financial Instruments

The table below presents a comparison by category of carrying values and estimated fair values of the
Company’s financial assets and liabilities December 31:

Carrying Value Fair Value

2017 2016 2017 2016
Financial Assets
Cash ₱ 14,194,602 ₱ 9,064,846 ₱ 14,194,602 ₱ 9,064,846
Trade and other receivables 26,056,063 21,505,790 26,056,063 21,505,790
Other current assets
Advances to employees - 569,041 - 569,041
Other advances 79,204 301,297 79,204 301,297
Other noncurrent assets
Advances to affiliates 7,796,759 7,796,759 7,796,759 7,796,759
Total ₱ 48,126,628 ₱ 39,237,733 ₱ 48,126,628 ₱ 39,237,733

Financial Liabilities
Trade and other
payables
Trade payables ₱ 17,705,323 ₱ 9,029,194 ₱ 17,705,323 ₱ 9,029,194
Accrued expenses 283,440 1,033,603 283,440 1,033,603
Loans payable 29,017,390 21,995,790 29,017,390 21,995,790
Total ₱ 47,006,153 ₱ 32,058,587 ₱ 47,006,153 ₱ 32,058,587

Fair Value is defined as the amount which the financial instrument could be exchanged in a current
transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced
liquidation sale. Fair values are obtained from quoted market prices and discounted cash flow models, as
appropriate.

The carrying amounts of cash, trade and other receivables, trade and other payables and loans payable are
based on their notional amounts, reasonably approximate their fair values because these are mostly short-
term in nature.

Fair Value Hierarchy

The Company uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation technique:

Level 1 - Quoted (unadjusted) prices in active market for identical assets or liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly; and
Level 3 - Inputs for the asset or liability that are not based on observable market data.

Fair value of the forward contracts is computed using a valuation technique which considers the use of
observable valuation inputs (Level 2). As of December 31, 2017 and 2016, there are nofinancial instruments
classified as Level 1 or Level 3 hierarchy.

- 29 -
 2017
Fair Value Measurement Using
Quoted
Prices in Significant Significant
Active Observable Unobservable
Markets Inputs Inputs
(Level 1) (Level 2) (Level 3) Total
Asset for which Fair Value is
Disclosed
Cash ₱ - ₱ 14,194,602 ₱ - ₱ 14,194,602
Trade and other receivables - 26,056,063 26,056,063
Other current assets -
Other advances - 79,204 - 79,204
Other noncurrent assets -
Advances to affiliates - 7,796,759 - 7,796,759
Total ₱ - ₱ 48,126,628 ₱ - ₱ 48,126,628

Liabilities for which Fair Value

is Disclosed
Trade and other payables
Trade payables ₱ - ₱ 17,705,323 ₱ - ₱ 17,705,323
Accrued expenses - 283,440 - 283,440
Loans payable 29,017,390 29,017,390
Total ₱ - ₱ 47,006,153 ₱ - ₱ 47,006,153

2016
Fair Value Measurement Using
Quoted
Prices in Significant Significant
Active Observable Unobservable
Markets Inputs Inputs
(Level 1) (Level 2) (Level 3) Total
Asset for which Fair Value is
Disclosed
Cash ₱ - ₱ 9,064,846 ₱ - ₱ 9,064,846
Trade and other receivables - 21,505,790 21,505,790
Other current assets -
Advances to employees - 569,041 - 569,041
Other advances - 301,297 - 301,297
Other noncurrent assets -
Advances to affiliates - 7,796,759 - 7,796,759
Total ₱ - ₱ 39,237,733 ₱ - ₱ 39,237,733

Liabilities for which Fair Value

is Disclosed
Trade and other payables
Trade payables ₱ - ₱ 9,029,194 ₱ - ₱ 9,029,194
Accrued expenses - 1,033,603 - 1,033,603
Loans payable 21,995,790 21,995,790
Total ₱ - ₱ 32,058,587 ₱ - ₱ 32,058,587

- 30 -
ADAMAY INTERNATIONAL CO., INC.
SCHEDULE OF THE EFFECTIVE STANDARDS AND INTERPRETATIONS
Effective as at December 31, 2017

Not Not
Title Adopted
Adopted Applicable

Framework for the Preparation and Presentation of Financial Statements

Conceptual Framework Phase A: Objectives and qualitative characteristics 

PFRSs Practice Statement Management Commentary 

Philippine Financial Reporting Standards (PFRSs)

Not Not
PFRS Title Adopted
Adopted Applicable

First-time Adoption of Philippine Financial Reporting

PFRS 1 (Revised) 
Standards

Amendments to PFRS 1 and PAS 27: Cost of an Investment


in a Subsidiary, Jointly Controlled Entity or Associate

Amendments to PFRS 1: Additional Exemptions for First-


time Adopters

Amendment to PFRS 1: Limited Exemption from


Comparative PFRS 7 Disclosures for First-time Adopters

Amendments to PFRS 1: Severe Hyperinflation and Removal


of Fixed Date for First-time Adopters

Amendments to PFRS 1: Government Loans 

PFRS 2 Share-based Payment 

Amendments to PFRS 2: Vesting Conditions and


Cancellations

Amendments to PFRS 2: Group Cash-settled Share-based


Payment Transactions

PFRS 3 (Revised) Business Combinations 

PFRS 4 Insurance Contracts 

Amendments to PAS 39 and PFRS 4: Financial Guarantee


Contracts
 Not Not
PFRS Title Adopted
Adopted Applicable

Non-current Assets Held for Sale and Discontinued

PFRS 5 
Operations

PFRS 6 Exploration for and Evaluation of Mineral Resources 

PFRS 7 Financial Instruments: Disclosures 

Amendments to PAS 39 and PFRS 7: Reclassification of


Financial Assets

Amendments to PAS 39 and PFRS 7: Reclassification of


Financial Assets - Effective Date and Transition

Amendments to PFRS 7: Improving Disclosures about


Financial Instruments

Amendments to PFRS 7: Disclosures - Transfers of Financial


Assets

Amendments to PFRS 7: Disclosures – Offsetting Financial


Assets and Financial Liabilities

Amendments to PFRS 7: Mandatory Effective Date of PFRS


9 and Transition Disclosures

PFRS 8 Operating Segments 

PFRS 9* Financial Instruments 

Financial Instruments: Classification and Measurement of


Financial Liabilities

Amendments to PFRS 9: Mandatory Effective Date of PFRS


9 and Transition Disclosures

PFRS 10* Consolidated Financial Statements 

Amendments to PFRS 10: Transition Guidance 

Amendments to PFRS 10: Investment Entities 

PFRS 11* Joint Arrangements 

Amendments to PFRS 11: Transition Guidance 

PFRS 12* Disclosure of Interests in Other Entities 

Amendments to PFRS 12: Transition Guidance 

Amendments to PFRS 12: Investment Entities 

PFRS 13* Fair Value Measurement 

Philippine Accounting Standards (PASs)

Not Not
PAS Title Adopted
Adopted Applicable

PAS 1 (Revised) Presentation of Financial Statements 

Amendments to PAS 32 and PAS 1: Puttable Financial


Instruments and Obligations Arising on Liquidation

Amendments to PAS 1: Presentation of Items of Other


Comprehensive Income

PAS 2 Inventories 

PAS 7 Statement of Cash Flows 

Accounting Policies, Changes in Accounting Estimates

PAS 8 
and Errors

PAS 10 Events after the Reporting Period 

PAS 11 Construction Contracts 

PAS 12 Income Taxes 

Amendment to PAS 12 - Deferred Tax: Recovery of


Underlying Assets

PAS 16 Property, Plant and Equipment 

PAS 17 Leases 

PAS 18 Revenue 

PAS 19 Employee Benefits 

Amendments to PAS 19: Remeasurement Gains and


Losses, Group Plans and Disclosures

PAS 19
Employee Benefits 
(Amended)*

Accounting for Government Grants and Disclosure of

PAS 20 
Government Assistance

PAS 21 The Effects of Changes in Foreign Exchange Rates 

Amendment: Net Investment in a Foreign Operation 

PAS 23
Borrowing Costs 
(Revised)

PAS 24
Related Party Disclosures 
(Revised)

PAS 26 Accounting and Reporting by Retirement Benefit Plans 

Consolidated and Separate Financial Statements

PAS 27 
 Not Not
PAS Title Adopted
Adopted Applicable

PAS 28
Investments in Associates and Joint Ventures 
(Amended)

PAS 29 Financial Reporting in Hyperinflationary Economies 

PAS 31 Interests in Joint Ventures 

PAS 32 Financial Instruments: Disclosure and Presentation 

Financial Instruments: Presentation 

Amendments to PAS 32 and PAS 1: Puttable Financial


Instruments and Obligations Arising on Liquidation

Amendment to PAS 32: Classification of Rights Issues 

Amendments to PAS 32: Offsetting Financial Assets and


Financial Liabilities

PAS 33 Earnings per Share 

PAS 34 Interim Financial Reporting 

PAS 36 Impairment of Assets 

PAS 37 Provisions, Contingent Liabilities and Contingent Assets 

PAS 38 Intangible Assets 

PAS 39 Financial Instruments: Recognition and Measurement 

Amendments to PAS 39: Transition and Initial


Recognition of Financial Assets and Financial Liabilities

Amendments to PAS 39: Cash Flow Hedge Accounting


of Forecast Intragroup Transactions

Amendments to PAS 39: The Fair Value Option 

Amendments to PAS 39 and PFRS 4: Financial


Guarantee Contracts

Amendments to PAS 39 and PFRS 7: Reclassification of


Financial Assets

Amendments to PAS 39 and PFRS 7: Reclassification of


Financial Assets – Effective Date and Transition

Amendments to Philippine Interpretation IFRIC–9 and


PAS 39: Embedded Derivatives

Amendment to PAS 39: Eligible Hedged Items 

PAS 40 Investment Property 

PAS 41 Agriculture 
Philippine Interpretations

Not Not
Interpretations Title Adopted
Adopted Applicable

Changes in Existing Decommissioning, Restoration and

IFRIC 1 
Similar Liabilities

Members’ Share in Co-operative Entities and Similar

IFRIC 2 
Instruments

IFRIC 4 Determining Whether an Arrangement Contains a Lease 

Rights to Interests arising from Decommissioning,

IFRIC 5 
Restoration and Environmental Rehabilitation Funds

Liabilities arising from Participating in a Specific Market -

IFRIC 6 
Waste Electrical and Electronic Equipment

Applying the Restatement Approach under PAS 29

IFRIC 7 
Financial Reporting in Hyperinflationary Economies

IFRIC 8 Scope of PFRS 2 

IFRIC 9 Reassessment of Embedded Derivatives 

Amendments to Philippine Interpretation IFRIC–9 and PAS


39: Embedded Derivatives

IFRIC 10 Interim Financial Reporting and Impairment 

IFRIC 11 PFRS 2- Group and Treasury Share Transactions 

IFRIC 12 Service Concession Arrangements 

IFRIC 13 Customer Loyalty Programmes 

The Limit on a Defined Benefit Asset, Minimum Funding

IFRIC 14 
Requirements and their Interaction

Amendments to Philippine Interpretations IFRIC- 14,


Prepayments of a Minimum Funding Requirement

IFRIC 16 Hedges of a Net Investment in a Foreign Operation 

IFRIC 17 Distributions of Non-cash Assets to Owners 

IFRIC 18 Transfers of Assets from Customers 

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments 

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 

IFRIC 21 Levies 

SIC-7 Introduction of the Euro 

 Not Not
Interpretations Title Adopted
Adopted Applicable

Government Assistance - No Specific Relation to Operating

SIC-10 
Activities

Jointly Controlled Entities - Non-Monetary Contributions by

SIC-13 
Venturers

SIC-15 Operating Leases - Incentives 

Income Taxes – Recovery of Revalued Non-Depreciable

SIC-21 
Assets

Income Taxes - Changes in the Tax Status of an Entity or its

SIC-25 
Shareholders

Evaluating the Substance of Transactions Involving the

SIC-27 
Legal Form of a Lease

SIC-29 Service Concession Arrangements: Disclosures. 

Revenue - Barter Transactions Involving Advertising

SIC-31 
Services

SIC-32 Intangible Assets - Web Site Costs 