BACHELOR OF SCIENCE IN ACCOUNTANCY

COURSE TITLE : Financial Accounting for PFRS for SMEs

COURSE CODE : AE 15
NUMBER OF UNITS : 3 units
PRE-REQUISITE SUBJECT :

A. COURSE DESCRIPTION:
This course deals with the discussion, appreciation and application of accounting
principles of PFRS for SMEs for the recognition, measurement, presentation and
disclosures of assets in the financial statements. These assets include current assets;
property, plant and equipment; intangible assets; investment in equity and debts
securities; investment property; other non-current financial assets; non-current
assets held for sale and biological assets.

B. COURSE LEARNING OUTCOMES

After the successful completion of this course, the student will be able to :

A. COGNITIVE
1. Discuss the nature and criteria of Small Medium Enterprises
2. Determine the required disclosures for the assets, liabilities and equity
in the financial statements of SMEs
3. Discuss the Philippine Financial Reporting Standards applicable for every
account and describe how these are applied to accounting problems

B. PSYCHOMOTOR
1. Measure the amount of assets, liabilities and equity on their initial
recognition and after initial recognition

C. AFFECTIVE
1. Determine the amount that will be presented in the financial statements
for each kind of account
2. Analyze the effects of errors on accounts on the current and future
financial statements
3. Formulate the proper adjusting entries to bring the assets to their
correct balances
C. COURSE OUTLINE AND TIMEFRAME
Strategies/ Assessment of
Wk Hrs Topic Learning Outcomes
Activities Learning Outcomes
 University policies; grading system  Discuss the university and college retention Sharing of
 Introduction to SMEs policies expectations Students to answer
 SEC Requirements from the the questions thrown
3  Financial Reporting Standards  Recall the topics learned about conceptual teacher to the to the class
 Kinds of Financial Statements framework and financial reporting students
 Cash and cash equivalents
1  Definition of Cash
 Nature and composition of cash
and cash equivalents

 Cash equivalents
 Cash equivalents
3  Investment of excess cash
 Measurement and financial
presentation
 Cash funds and cash balances
 Checks / kinds of checks
 Cash management / Investment of
excess cash
 Imprest system
 Petty Cash Fund
 Explain the nature and composition of cash Lecture/Class At least 75% of the
and cash equivalents Discussion students must be
 Identify the items considered as cash able to perform the
equivalents Illustration exercises
 Make the proper presentation of cash and Exercises
cash equivalents in the financial statements
 Describe and explain the good practices in
the management and control of cash
 Explain how the petty cash system operates
 Prepare the proper journal entries involving
petty cash

 Cash and cash equivalents  Explain the importance of a bank Lecture/Class Students to answer
 Bank to Book reconciliation Discussion exercises and
 Book to Bank  Identify the reconciling items in a bank problems related to
2  Adjusted book to adjusted bank reconciliation and their proper treatment Illustration the topic.
3 balance  Prepare a bank reconciliation Exercises At least 75% of the
 Proof of Cash Reconcile the cash receipts and students must be
disbursement in a company’s ledgers with able to perform the
the corresponding amounts in the bank exercises
statement
 Prepare a proof of cash
 Accounts Receivables  Discuss the nature and classification of Lecture/Class Students to answer
 Nature and classification of receivables Discussion exercises and
receivables  Prepare journal entries affecting problems related to
 Measurement of accounts receivables Illustration the topic.
 Strategies/ Assessment of
Wk Hrs Topic Learning Outcomes
Activities Learning Outcomes
1.5 receivable  Make the proper measurement of the quiz At least 75% of the
 Accounting for bad debts impairment of receivables students must be
 Prepare the correct journal entry for bad able to perform the
3 debts exercises / get at leat
83# in the quiz
  Lecture/class At least 75% of the
discussion students must be
1.5 able to perform the
Illustration / exercises
exercises
  Lecture/Class Students to answer
Discussion exercises and
1.5 problems related to
Illustration the topic. At least
Exercises 75% of the students
must be able to
perform the exercises
4 * Notes Receivables  Explain the nature of a note receivable Lecture/Class Students to answer
 Definition and measurement of  Determine the initial and subsequent Discussion exercises and
notes receivable measurement of note receivables problems related to
1.5  Interest and non-interest bearing  Prepare the related journal entries Illustration the topic. At least
note receivable  Determine the disclosure requirements in Exercises 75% of the students
* Disclosure requirements the financial statements must be able to
perform the exercises
 Loans Receivables  Discuss the different forms of receivable Lecture/Class Students to answer
 Initial and subsequent financing Discussion exercises and
3 measurement  Compute the proceeds from the different problems related to
5  Impairment and measurement of form of account receivable financing Illustration the topic. At least
impairment  Compute the proceeds from discounting of Exercises 75% of the students
 Accounts receivable financing notes receivable must be able to
 Pledge, assignment and factoring  Prepare the related journal entries in perform the exercises
of receivable accounts receivable financing and and get at least 83%
discounting of notes receivable in the quiz
 Discounting of notes receivable
1.5 LONG QUIZ
 Inventories  Discuss the nature of inventories and Lecture/Class Students to answer
 Nature and classes of inventories enumerate the items includible in the Discussion exercises and
6  Goods includible in the inventory inventory problems related to
1.5 Illustration the topic. At least
 Strategies/ Assessment of
Wk Hrs Topic Learning Outcomes
Activities Learning Outcomes
 Ownership of inventories  Determine the ownership of inventories Exercises / 75% of the students
according to the shipping terms. must be able to
perform the exercises
 Inventory Cost Flow  Compute the amount of inventory under the Lecture/Class Students to answer
 Inventory cost formulas different cost formulas Discussion exercises and
 FIFO problems related to
1.5  LIFO Exercises the topic. At least
 Weighted average quiz 75% of the students
must be able to
 Moving average
 Discuss the lower of cost and net realizable perform the exercises
 Lower of Cost and Net Realizable
value as basis for measurement of inventory and get at least 83%
Value
 Apply the lower of cost / net realizable value in the quiz
7  Accounting for inventory write-
down
 Purchase commitments
 Inventory Estimation Methods  Explain the rationale for making estimate of Lecture/Class Students to answer
1.5  Gross Profit Method inventory value Discussion exercises and
 Computation of gross profit  Apply the formulas and compute the amount problems related to
rate of inventory using the different inventory Illustration the topic.
 Treatment of sales allowance estimation methods Exercises At least 75% of the
and sales discount  Prepare the proper journal entry students must be
 Retail Inventory Method able to perform the
exercises
 Basic formula
 Treatment in the formula of
items in the inventory
estimation
 Financial asset at fair value  Discuss the classification of financial assets Lecture/Clas Students to answer
 Definition and purpose of investments  Determine the initial and subsequent s Discussion exercises and
 Examples and classification financial measurement of financial assets problems related to
asset  Apply the proper treatment of gain or loss in Illustration the topic.
1.5 Exercises At least 75% of the
 Initial and subsequent measurement of the sale of financial assets
financial assets students must be
 Trading securities able to perform the
 Sale of equity investment exercises
8
1.5  Investment in Equity Securities  Discuss the nature of investment in equity Lecture/Clas Students to answer
 Modes of acquisitions of equity shares s Discussion exercises and
investments  Explain the different kinds of dividends and problems related to
 Sale of equity shares prepare the corresponding journal entry Illustration the topic.
 Strategies/ Assessment of
Wk Hrs Topic Learning Outcomes
Activities Learning Outcomes
 Different kinds of dividends  Discuss share splits and share rights and Exercises At least 75% of the
 Share splits prepare the corresponding journal entry students must be
 Share rights able to perform the
exercises

9 MIDTERM EXAMINATIONS

 Investment in Associate  Explain the meaning of investment in an Lecture/Class Students to answer

 Nature of inter-corporate investment associate Discussion exercises and
 Significant influence  Determine if an investment can create a problems related to
 Equity method of accounting for significant influence on the investee illustration the topic.
1.5 investment in associate  Prepare proper journal entries relative to Exercises
 Impairment loss investment in associate under different At least 75% of the
 Adjustment of investee’s operation stages of significant influence students must be
 Apply the proper treatment of transactions able to perform the
 Discontinuance of equity method
with an associate exercises
 Measurement after loss of significant
influence
10
 Accounting for investment of less than
20%
 Other accounting issues involving
investment in associate
 Financial asset at amortized cost /  Explain the nature of bond Students to answer
bond investment  Determine the measurement of bonds Lecture/Class exercises and
 Classification of bond investment  Prepare the journal entries relative to Discussion problems related to
 Initial and subsequent investment in bonds and the amortization of the topic.
measurement of bond investment discount or premium Illustration
 Methods of amortization of premium or Exercises At least 75% of the
discount students must be
 Sale of bonds able to perform the
exercises
 Other kinds of bonds
1.5  Apply the effective interest method of
 Effective Interest Method
 Effective rate versus nominal rate amortizing bond discount and premium
 Effective interest method in
accounting for discount and
premium  Identify the requirements for reclassification
of financial asset
 Reclassification of Financial asset
 Prepare the journal entries for reclassifying
 Requirement for reclassification
a financial asset
 Strategies/ Assessment of
Wk Hrs Topic Learning Outcomes
Activities Learning Outcomes
 Exemption for reclassification
 Modes of reclassifying financial
asset
 FVPL to amortized cost
 Amortized cost to FVPL
 Amortized cost to FVOCI
 FVOCI to amortized cost
 FVPL to FVOCI
 FVOCI to FVPL
 Investment Property  To explain the nature and purpose of Lecture/Class Students to answer
 What an investment property is investment property Discussion exercises and
 What are considered as problems related to
investment properties / what are  To distinguish investment property Exercises / the topic.
not investment properties and owner-occupied property Quiz At least 75% of the
 Initial and subsequent students must be
measurement of investment  To determine the initial and able to perform the
property subsequent measurement of exercises and get at
 Part investment and pat owner- investment property least 83% in the quiz
1.5 occupied property
 Fair value and cost model of  To prepare the necessary journal
investment property entries related to investment property
 Transfers and measurement of
transfers of investment property  To formulate the proper disclosures
11  De-recognition of investment required for investment property
property
 Disclosure requirements for
investment property
 Cash surrender value of life
insurance and accounting
procedures
 Derivatives  To explain the nature and purpose of the Students to answer
 Nature and purpose of derivatives different forms of derivatives Lecture/Class exercises and
 Types of financial risk  To identify the financial risks related to Discussion problems related to
 Characteristics of derivatives derivatives the topic.
 Examples of derivatives  To determine the recognition and Illustration At least 75% of the
1.5 measurement of derivatives Exercises students must be
 Measurement of derivatives
 To prepare the related journal entries able to perform the
 Strategies/ Assessment of
Wk Hrs Topic Learning Outcomes
Activities Learning Outcomes
exercises
 Property, plant & equipment  To explain the nature and characteristics of Students to answer
 Definition and characteristics of property, plant and equipment Lecture/Class exercises and
property, plant and equipment  Identify specific items of property, plant and Discussion problems related to
 Specific items of property, plant equipment the topic.
and equipment  To determine the recognition and Illustration
 Directly attributable costs measurement of property, plant and Exercises At least 75% of the
 Measurement of initial equipment under different modes of students must able to
recognition under the different acquisition perform the exercises
1.5 modes of acquisition  To determine the proper accounting and
 Cash basis classification of property held for sale or
 On account idle or abandoned property
 On instalment basis
 Issuance of note payable
 Issuance of shares
 Issuance of bonds
 Trade in or exchange
12  Donation
 Construction
 De-recognition
 Fully depreciated property
 Property classified as held for sale
 Idle or abandoned property
 Disclosure requirements
 Government Grant  To explain the nature of government grant Lecture/Class Students to answer
 Recognition and measurement of  To determine the recognition, measurement Discussion exercises and
grant and financial statements presentation of problems related to
 Accounting for government grant government grant Illustration the topic.
1.5  Presentation of government grant Exercises At least 75% of the
 Repayment of government grant  To explain the nature and proper students must be
 Borrowing Costs accounting for borrowing costs able to perform the
exercises
 What are borrowing costs
 Borrowing costs not capitalized
 Accounting for borrowing cost
 Land and Building  To determine the proper classification of Students to answer
 Costs chargeable to land land Lecture/Class exercises and
Discussion problems related to
 Strategies/ Assessment of
Wk Hrs Topic Learning Outcomes
Activities Learning Outcomes
 Land improvements  To identify the expenditures to be included the topic.
 Cost of building when purchased as cost of land or building under different Illustration
 Cost of building when constructed purchase arrangements Exercises At least 75% of the
3.0  Sidewalks, pavements, parking  To apply the proper treatment of other students must able to
lots, driveways items related to land or building perform the exercises
13
 Building fixtures and get at least 83%
in the quiz
 Ventilating system, lighting
system, elevator
 Cost of demolition of old building
to construct a new building
1.5 LONG QUIZ
 Machinery  Identify the costs to be charged to Students to answer
 Expenditures included as cost of machinery upon acquisition Lecture/Class exercises and
machinery  Determine the proper treatment of costs Discussion problems related to
 Tools after acquisition; the topic.
 Patterns and dies  Distinguish between capital and revenue Illustration
 Equipment expenditures and their proper treatment Exercises At least 75% of the
 Prepare the proper journal entries students must able to
 Returnable containers
perform the exercises
 Capital and revenue expenditures
14 1.5
 Recognition of subsequent cost
 Additions
 Improvements
 Additions
 Replacements
 Repairs
 Maintenance
 Rearrangement cost
 Accounting for major
replacement
 Depreciation  To explain the concept of depreciation and Students to answer
 Concept of depreciation depletion Lecture/Class exercises and
 Kinds of depreciation  To identify and discuss the causes of Discussion problems related to
 Factors in computing depreciation depreciation the topic.
 Methods of depreciation  To compute the depreciation using the Illustration
different methods Exercises / At least 75% of the
 Accelerated methods of
 To explain the nature of wasting assets quiz students must able to
depreciation
 Strategies/ Assessment of
Wk Hrs Topic Learning Outcomes
Activities Learning Outcomes
1.5  Depletion  To apply the proper accounting for perform the exercises
 Definition of depletion depreciation of mining equipment and get at least 83%
 Exploration and evaluation  To prepare the proper journal entries for in the quiz
expenditures depletion of wasting assets
 Exploration and evaluation asset
 Measurement and classification
 Wasting assets
 Acquisition, exploration,
15 development and restoration cost
of wasting asset
 Revaluation  To explain the concept of revaluation of Students to answer
 Measurement of property, plant property, plant and equipment Lecture/Class exercises and
and equipment using the  To identify the basis and requirements for Discussion problems related to
revaluation model revaluation the topic.
 Frequency of revaluation  To discuss and apply the approaches in Illustration
 Approaches in recording the recording revaluation Exercises At least 75% of the
revaluation  To apply the treatment of surplus resulting students must able to
from revaluation perform the exercises
 To prepare the proper journal entries
1.5  To explain the principle for the recognition
 Impairment of assets of impairment
 Definition and basic principle about  To determine the measurement of
impairment of assets recoverable amount
 Causes of impairment of assets  To apply the proper accounting for an
 Measurement of recoverable amount impairment loss
 Reversal of impairment loss  To prepare the proper journal entries
 Impairment of asset in a cash
generating unit
 Intangible assets  To explain the essential requirements for Lecture/Class Students to answer
 Definition / identification of intangible intangible assets Discussion exercises and
assets  To determine the measurement on initial problems related to
 Recognition; initial and subsequent and subsequent recognition of intangible Illustration the topic.
measurement of intangible assets assets Exercises
 Disclosures related to intangible  To determine the amortization and At least 75% of the
assets impairment of intangible assets students must able to
 Identifiable intangible assets  To identify internally generated intangible perform the exercises
 Patent assets
 Strategies/ Assessment of
Wk Hrs Topic Learning Outcomes
Activities Learning Outcomes
1.5  Trademark
 Copyright
 Franchise
 Others
 Goodwill
 Research and development cost  To explain what goodwill is; determine its
 Definition of research recognition and measurement
 Accounting for research cost  To distinguish between research cots and
development cost
 Definition of development cost
 To apply the criteria for recognition of
16  Accounting for development cost
development cot
 Biological assets  To discuss the difference between Lecture/Class Students to answer
 Definition of biological assets, biological asset, agricultural produce and Discussion exercises and
agricultural produce and harvest agricultural activity problems related to
 Agricultural activities  To determine the recognition and Exercises the topic.
 Biological transformation measurement of biological asset or
 Recognition and measurement of agricultural produce At least 75% of the
biological assets  To identify and apply the proper treatment students must able to
 Bearer plants for other items related to agriculture such perform the exercises
as bearer plants, plant with dual use, bearer and pass the pre-final
 Agricultural assets attached to land
1.5 exam
 Bearer animals animals and animals used in recreational
 Animal-related recreational activities activities
1.5 PRE – FINAL EXAM
17
1.5 REVIEW

18 FINAL EXAM
D. Required Reading (Textbook)
1. Intermediate Accounting Vol 1; 2019 Edition; Valix, Peralta and Valix; GIC
Enterprises & Co., Inc.

E. Suggested Reading and References

1. Intermediate Accounting Series Vol. 1 – 3; 2017 Edition; Robles and Empleo;
Millennium Bookstore
2. Financial Accounting Vol. 1; 2017 Edition; Valix, Peralta and Valix; GIC
Enterprises & Co., inc.
3. Principles of Accounting, Wiley Custom Edition 3ed; 2013; Weygandt; John
Wiley & Sons Australia.
4. Financial Accounting (international Financial Reporting Standards); Second
Edition; 2015; Jan R. Williams et al; Mc Graw Hill

F. Course Requirements
* At least two quizzes during each grading term or a total of our quizzes and
two major examinations

G. Grading System

Midterm Grade (MG) Pre-Final Grade (PFG)

Midterm Exam 40% Final Exam 40%
Class Standing 60% Class Standing 60%
Quizzes 15% Quizzes 15%
Recitation Recitation 10%
10% Assignment 5%
Assignment Seatwork 10%
5% Output 20%
Seatwork 10% 100% Total 100%
Output 20%
Total

Final Grade (FG)= (MG + PFG) / 2

H. Classroom Policies
A. Absences and tardiness
Students are required to come to class on time. A grace period of fifteen (15)
minutes shall be provided after which the student shall be considered absent.
Unexcused absence of at least seven (7) times for a 1.5 hours class or four (4)
times for a 3.0 hours class shall result to a “FDA” or “Failure Due to
Absences” status. Absence is excused when approved by the Head of the Office
of Student Affairs and Services (OSAS) upon presentation of a medical certificate
or other appropriate documents.
 B. Conduct
Students are required to show proper behaviour at all times. Improper behavior
specially disrespect, dishonesty in any manner including cheating during quiz or
examination, vandalism, violence or involvement in any illegal activity shall be
subject to disciplinary action in accordance with the school rules and regulations.

Students are not allowed to use mobile phones or any gadget while inside the
class unless necessary as determined by the faculty handling the class.

C. Special quizzes and examinations

Special examinations and quizzes shall not be given to any student who failed to
take the examination or quiz unless with justifiable reason. No special quiz shall
be given after a week from the date of the quiz.

I. Consultation Hours
Consultation schedule shall be posted at the College of Accountancy Office. The
students may also consult with the Program Head based on the schedule that will
also be posted at the College of Accountancy office. The students may also make
use of the “CONCERNS BOX” that is installed at the college office.

Prepared by: Approved by:

Atty. Lozano R. Brozas, CPA Ms. Grethel T.

Ledesma, CPA, MBA