First Time
PFRS 1:
Adoption of PFRS
NATURE
First Time Adopter
 It is an entity that presents for the first time its
financial statements in conformity with
Philippine Financial Reporting Standards.
First PFRS financial statements
 It is the first annual statements in which an
entity adopts PFRS by an explicit and
unreserved statement of compliance with PFRS.
Conditions:
1. When an entity presented its most recent
previous financial statements:
a. Under national GAAP inconsistent with
PFRS in all respects.
b. In conformity with PFRS in all respects
but these statements did not contain an
explicit and unreserved statement of
compliance with PFRS.
c. Containing an explicit statement of
compliance with some but not all PFRS.
d. Under national GAAP with a
reconciliation of selected figures to
amounts determined under PFRS.
2. When an entity prepared financial statements
in the previous period under PFRS but the
financial statements were for internal use only.
3. When an entity prepared financial statements
in the previous period under PFRS for
consolidation purposes without preparing a
complete set of financial statements.
4. When an entity did not present financial
statements in the previous period.
Date of Transition to PFRS
 It refers to the beginning of the earliest period
for which an entity presents full comparative
information under PFRS in its first PFRS financial
statements.
Two Factors
 The date of adoption of PFRS
 The number of years of comparative
information that an entity decides to presents
together with the financial statements in the
year of adoption.
RECOGNITION
 Financial statements presented by an entity in the
current year would qualify as first financial
statements under the following conditions:
1. When an entity presented its most recent
previous financial statements:
a) Under national GAAP inconsistent
with PFRS in all respects.
b) In conformity with PFRS in all
respects but these statements did
not contain an explicit and
unreserved statement of
compliance with PFRS.
c) Containing an explicit statement of
compliance with some but not all
PFRS.
d) Under national GAAP with
reconciliation of selected figures to
amounts determined under PFRS.
2. When an entity prepared financial
statements in the previous period under PFRS
but the financial statements were for internal
use only.
3. When an entity prepared financial
statements in the previous period under PFRS
for consolidation purposes without preparing
a complete set of financial statements.
4. When an entity did not present financial
statements in the previous period.
 An opening PFRS statement of financial position is
the statement of financial position prepared by a
first time adopter on the date of transition to
PFRS.
1. Recognize all assets and liabilities
required by PFRS.
2. Derecognize assets and liabilities not
permitted by PFRS.
3. Measure all recognized assets and
liabilities in compliance with PFRS.

PRESENTATION

 If the entity adopts PFRS for the first time in the

current year, it should include the following:
1. Three statements of Financial Position (
At the end of the current year, at the end
of current year and at the date of
transition to PFRS)
2. Two statements of comprehensive
income (Current and prior year)
3. Two separate income statements
(Current and prior year)
4. Two statements of changes in equity
(Current and prior year)
5. Two statements of cash flow (Current and
prior year)
6. Notes to financial statements (Current
and prior year)
 PFRS 2: Share-Based
Payment
NATURE
Share-based compensation plan
It is a compensation arrangement established by
the entity whereby the entity’s employees shall
receive equity shares in exchange for their
services or the entity incurs liabilities to the
employees in amounts based on the price of its
shares. It is also classifies into two:
1. Equity settled
2. Cash settled
Share options
This are granted to officers and key employees to
enable them to acquire shares of the entity
during a specified period upon fulfillment of
certain conditions at a specified price.
Share appreciation right
It entitles an employee to receive cash which is
equal to the excess of the market value of the
entity’s share over a predetermined price for a
stated number of shares on settlement.
MEASUREMENT
The compensation resulting from share options is
measured following two methods:
1. Fair Value Method – The compensation
is equal to the fair value of the share
options on the date of grant.
2. Intrinsic Value Method – The
compensation is equal to the intrinsic
value of the share options.
The compensation is based on the fair value of
the liability at the reporting date and shall be
measured ate every year-end until it is finally
settled.
Share Appreciation Right
The compensation is based on the fair value of the
liability at the reporting date and shall be
remeasured at every year-end until it is finally settled.
Any changes in fair value are included in profit or
loss.
The fair value of liability is equal to the excess of
the market value of share over a predetermined price
for a given number of share over a definite vesting
period.
RECOGNITION
Compensation
1. If the share options vest immediately,
the employee is not required to
complete a specified period of service
before unconditionally entitled to the
share options.
2. If the share options do not vest until the
employee completes a specifies service
period the compensation is recognized
as expense over the service period or
vesting period.
Acceleration of Vesting
 PFRS 2, paragraph 28, provides that of an entity
cancels or settles a grant of share options
during the vesting period, the entity shall
account for the cancelation or settlement as an
acceleration of vesting.
a) The entity shall recognize immediately
the compensation expense that
otherwise would have been recognized
for services received over the
remainder of the vesting period.
 b) Any payment made to the employee on
the cancelation or settlement of the
grant shall be accounted for as the
repurchases of equity interest, meaning
deduction form equity.
In other words, if the payment exceeds
the fair value of the share options, the
excess shall be recognized as an
expense.

Share Appreciation Right

a) If the share appreciation right vests

immediately, the compensation is recognized
immediately.
b) If the share appreciation right does not vest
until the employee completes a definite vesting
period, the compensation is recognized over
the vesting period.
 PFRS 2:Noncurrent
Asset Held for sale
NATURE
Noncurrent asset
It is an asset that does not meet the definition
of current asset.
Noncurrent Asset Held for Sale
It means that the entity does not intend to use
the asset as part of the on-going business but
intends to sell and recover the carrying amount
principally through sale.
Conditions:
1. The asset or disposal group is available for
immediate sale in the present condition.
2. The sale must be highly probable.
MEASUREMENT
Measurement of Noncurrent Asset Held for Sale
 It shall be measured at the lower of carrying
amount or fair value less cost of disposal.
 It shall not be depreciated.
Writedown to fair value less cost of disposal
 If the fair value less cost of disposal is lower
than the carrying amount of the asset or
disposal group, the writedown to fair value less
cost of disposal is treated as an impairment
loss.
 If the noncurrent asset is a disposal group, the
impairment loss is apportioned across the
assets based on carrying amount.
RECOGNITION
Subsequent increase in fair value
 An entity shall recognize a gain but not in excess
of any impairment loss previously recognized.
Abandoned noncurrent asset
 Shall not classify as held for sale noncurrent
asset or disposal group.
Temporarily abandoned
 Shall not account for a noncurrent asset that
has been temporarily taken out of use as if it
had been abandoned.
Change in classification
 Circumstances could arise leading to the
noncurrent asset no longer being classified as
held for sale.
 In such case, the entity shall measure the
noncurrent asset that ceases to be classified as
held for sale at the lower between:
o Carrying amount of the asset on the
basis that the asset had not been
classified as held for sale.
o Recoverable amount at the date of the
subsequent decision not to sell.
PRESENTATION
Presentation of asset classified as held for sale
 Noncurrent asset that is already classified as
held for sale shall be presented separately as
current asset.
 If the noncurrent asset is disposal group
classified as held for sale, the asset and labilities
of the group shall be presented separately and
cannot be offset as a single amount.