COVER SHEET

for
AUDITED FINANCIAL STATEMENTS

SEC Registration Number

0 3 5 4 3 5 6 5 7 8 9 0

COMPANY NAME

A L D R E A L - M I K E J A Y I N C .

PRINCIPAL OFFICE( No. / Street / Barangay / City / Town / Province )

L O T 3 2 , B L OC K 4 5 H ER N AN C O R T E S

S T , M A N D A U E C I T Y , C E B U , R E G I O N V I

I , P H I L I P P I N E S , 6 0 1 4

Secondary License Type, If

Form Type Department requiring the report Applicable

A F S

COMPANY INFORMATION
Company’s Email Address Company’s Telephone Number Mobile Number
aldrealmikejay@yahoo.com 032-516-2521 09245634211

No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day)

5 JULY 1 01/20

CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation
Name of Contact Person Email Address Telephone Number/s Mobile Number

BRYAN RUBIO aldrealmikejay@yahoo.com 031-518-4763 09458210719

CONTACT PERSON’s ADDRESS

Lot 32, Block 45 Hernan Cortes St, Mandaue City, CEBU, REGION VII, Philippines, 6014

NOTE1 : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to
the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new
contact person designated.
2 : All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s
records with the Commission and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse
the corporation from liability for  its deficiencies.

Page 1 of 27
 ALDREAL-MIKEJAY INC.
Lot 32, Block 45 Hernan Cortes St, Mandaue City,
CEBU, REGION VII, Philippines, 6014

STATEMENT OF MANAGEMENT'S RESPONSIBILITY

FOR FINANCIAL STATEMENTS

The management of ALDREAL-MIKEJAY INC. is responsible for the preparation and fair
presentation of the financial statements including the schedules attached therein, for the
month ended February 10, 2020, in accordance with the prescribed financial reporting
framework indicated therein, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's
ability to continue as a going concern, disclosing , as applicable matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is responsible for overseeing the Company's financial reporting
process.

The Board of Directors reviews and approves the financial statements including the schedules
attached therein, and submits the same to the stockholders.

ALDWIN DHON MARTEL

President

RHOMMEL BONGHANOY
Corporate Secretary/ Treasurer

Signed this _______________, 2020

ALDREAL-MIKEJAY INC.
STATEMENTS OF FINANCIAL POSITION

February 2020 January 2020

ASSET
Current Asset
Receivables (Note 4) P3,948,790 P3,936,970
TOTAL ASSET P3,948,790 P3,936,970

LIABILITY AND EQUITY

Current Liability
Accounts payable and accrued expenses (Note 5) P32,320 P10,000
Equity
Share capital (Note 6) 10,500,000.00 10,500,000.00
Deficit (6,583,530) (6,573,030)
Total Equity 3,916,470 3,926,970
TOTAL LIABILITY AND EQUITY P3,948,790 P3,936,970

See accompanying Notes to Financial Statements.

ALDREAL-MIKEJAY INC.
STATEMENTS OF COMPREHENSIVE INCOME

Months of Operation
February 2020 January 2020

REVENUES P− P−

EXPENSES
Professional fee 10,000 10,000
Taxes and licenses 500 200
10,500 10,200

LOSS BEFORE INCOME TAX (10,500) (10,200)

PROVISION FOR INCOME TAX (Note 7) − −

** Expression is ** Expression is
NET LOSS faulty ** faulty **

OTHER COMPREHENSIVE INCOME (LOSS) − −

P** Expression is
faulty ****
Expression is P** Expression is
TOTAL COMPREHENSIVE LOSS faulty ** faulty **

See accompanying Notes to Financial Statements.

ALDREAL-MIKEJAY INC.
STATEMENTS OF CHANGES IN EQUITY

Months of Operation
February 2020 January 2020

SHARE CAPITAL(Note 6) P10,500,000.00 P10,500,000.00

DEFICIT
Beginning balance (6,583,530) (6,573,030)
Net loss (10,500) (10,200)
** Expression is ** Expression is
Ending balance faulty ** faulty **

TOTAL EQUITY P3,948,790 P3,936,970

See accompanying Notes to Financial Statements.

Page 6 of 27
ALDREAL-MIKEJAY INC.
STATEMENTS OF CASH FLOWS

Months of Operation
February 2020 January 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before income tax (P10,500) (P10,200)
Increase/ decrease in receivables (11,820) 11,320
Increase/ decrease in accounts payable and accrued expenses 22,320 (1,120)
Net cash used in operating activities − −
** Expression is ** Expression is
NET INCREASE IN CASH faulty ** faulty **
** Expression is ** Expression is
CASH AT BEGINNING OF YEAR faulty ** faulty **
P** Expression is P** Expression is
CASH AT END OF YEAR faulty ** faulty **

See accompanying Notes to Financial Statements.

ALDREAL-MIKEJAY INC.
NOTES TO FINANCIAL STATEMENTS

1. Corporate Information

Aldreal-MikeJay Inc., a stock corporation, was incorporated and registered with the Securities and
Exchange Commission (SEC) on January 20, 2020, per Registration No. 035-435657890.The
primary purpose is to engage, conduct, operate or manage real estate business such as room
rentals, apartments and condominiums, for clients and tourists, with interest in finding a
comfortable and suitable living space in a brief span of time. It also serves drinks, foods and other
products in relation to its primary business. Provided that the corporation shall not
solicit, accept or take investments/placements from the public neither shall it issue investment
contracts. The Lot 32, Block 45 Hernan Cortes St, Mandaue City, CEBU, REGION VII,
Philippines, 6014.

The financial statements of the Company for the months of February 2020 and January 2020 were
authorized for issue by the Board of Directors on March 1, 2020.
2. Basis of Preparation, Statement of Compliance and Summary of Significant Accounting
Policies

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

Statement of Compliance
The Company’s financial statements have been prepared in accordance with the Philippine
Financial Reporting Standards (PFRS).

Adoption of New and Amended Accounting Standards and Interpretations

The accounting policies adopted in the preparation of the Company’s financial statements are
consistent with PFRSs which became effective January 1, 2016.

The nature and impact of each new standard and amendment are described below:

 PAS 1, Presentation of Financial Statements – Disclosure Initiative (Amendments)

The amendments are intended to assist entities in applying judgment when meeting the
presentation and disclosure requirements in PFRSs. They clarify the following:

• That entities shall not reduce the understandability of their financial statements by either
obscuring material information with immaterial information; or aggregating material items
that have different natures or functions
• That specific line items in the statement of income and OCI and the statement of financial
position may be disaggregated
• That entities have flexibility as to the order in which they present the notes to financial
statements
• That the share of OCI of associates and joint ventures accounted for using the equity
method must be presented in aggregate as a single line item, and classified between those
items that will or will not be subsequently reclassified to profit or loss.
These amendments do not have any material impact on the Company.

 PFRS 10, Consolidated Financial Statements, PFRS 12, Disclosure of Interests in Other
Entities, and PAS 28, Investments in Associates and Joint Ventures – Investment Entities:
Applying the Consolidation Exception (Amendments)
These amendments clarify that the exemption in PFRS 10 from presenting consolidated
financial statements applies to a parent entity that is a subsidiary of an investment entity that
measures all of its subsidiaries at fair value and that only a subsidiary of an investment entity
that is not an investment entity itself and that provides support services to the investment
entity parent is consolidated. The amendments also allow an investor (that is not an
investment entity and has an investment entity associate or joint venture), when applying the
equity method, to retain the fair value measurement applied by the investment entity associate
or joint venture to its interests in subsidiaries. These amendments are not applicable to the
Company since the Company does not have an investment in associates and joint venture.

 PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements
(Amendments)
The amendments allow entities to use the equity method to account for investments in
subsidiaries, joint ventures and associates in their separate financial statements. Entities
already applying PFRSs and electing to change to the equity method in its separate financial
statements will have to apply that change retrospectively. These amendments do not have any
impact on the Company’s financial statements.
 PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations
(Amendments)
The amendments to PFRS 11 require a joint operator that is accounting for the acquisition of
an interest in a joint operation, in which the activity of the joint operation constitutes business
(as defined by PFRS 3), to apply the relevant PFRS 3 principles for business combinations
accounting. The amendments also clarify that a previously held interest in a joint operation is
not remeasured on the acquisition of an additional interest in the same joint operation while
joint control is retained. In addition, a scope exclusion has been added to PFRS 11 to specify
that the amendments do not apply when the parties sharing joint control, including the
reporting entity, are under common control of the same ultimate controlling party.

The amendments apply to both the acquisition of the initial interest in a joint operation and the
acquisition of any additional interests in the same joint operation. These amendments do not
have any impact to the Company as there has been no interest acquired in a joint operation
during the period.

 PFRS 14, Regulatory Deferral Accounts

PFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-
regulation, to continue applying most of its existing accounting policies for regulatory deferral
account balances upon its first-time adoption of PFRS. Entities that adopt PFRS 14 must
present the regulatory deferral accounts as separate line items on the statement of financial
position and present movements in these account balances as separate line items in the
statement of income and other comprehensive income. The standard requires disclosures on
the nature of, and risks associated with, the entity’s rate-regulation and the effects of that rate-
regulation on its financial statements. Since the Company is an existing PFRS preparer, this
standard would not apply.

 PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants
(Amendments)
The amendments change the accounting requirements for biological assets that meet the
definition of bearer plants. Under the amendments, biological assets that meet the definition
of bearer plants will no longer be within the scope of PAS 41. Instead, PAS 16 will apply.
After initial recognition, bearer plants will be measured under PAS 16 at accumulated cost
(before maturity) and using either the cost model or revaluation model (after maturity). The
amendments also require that produce that grows on bearer plants will remain in the scope of
PAS 41 measured at fair value less costs to sell. For government grants related to bearer
plants, PAS 20 Accounting for Government Grants and Disclosure of Government Assistance
will apply. These amendments are not expected to have any impact to the Company as the
Company does not have any bearer plants.

 PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification of
Acceptable Methods of Depreciation and Amortization (Amendments)
The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of
economic benefits that are generated from operating a business (of which the asset is part)
rather than the economic benefits that are consumed through use of the asset. As a result, a
revenue-based method cannot be used to depreciate property, plant and equipment and may
only be used in very limited circumstances to amortize intangible assets. These amendments
do not have any impact to the Company given that the Company does not have any property,
plant and equipment and intangible assets.

 PIC Q&A No. 2016-02

In 2016, the PIC issued Q&A No. 2016-02 to clarify the accounting treatment of club shares
held by an entity as follows:
 PAS 32 and PAS 38 – Accounting Treatment of Club Shares Held by an Entity

Club shares as financial assets

Equity instruments of another entity are considered as financial assets of the investor/holder in
accordance with PAS 32.11. Furthermore, PAS 32.11 defines an equity instrument as any
contract that evidences a residual interest in the assets after deducting its liabilities.
A proprietary club share entitles the shareholder to a residual interest in the net assets upon
liquidation which justifies that such instrument is an equity instrument and thereby qualifies as
a financial asset to be accounted for under PAS 39, Financial Instruments: Recognition and
Measurement.

Club shares as intangible assets

PAS 38 defines an intangible asset as an identifiable non-monetary asset without physical
substance. The key characteristics of intangible assets are that they are resources controlled
by the entity from which the entity expects to derive future economic benefits, lack physical
substance and are identifiable to be distinguished from goodwill.

A non-proprietary club share, though an equity instrument in its legal form, is not an equity
instrument in the context of PAS 32. Furthermore, it does not entitle the holder to a
contractual right to receive cash or another financial asset from the issuing corporation. The
holder of the share, in substance, only paid for the privilege to enjoy the club facilities and
services but not for ownership of the club. In such case, the holder must account for the share
as an intangible asset under PAS 38.

These amendments are not expected to have any impact to the Company as the Company does
not have any club shares.

Annual Improvements to PFRSs(2012-2014 cycle)

The Annual Improvements to PFRSs (2012-2014 cycle) are effective January 1, 2016 and the
Company has applied these amendments for the first time in these financial statements. Unless
otherwise stated, these amendments have no material impact on the Company’s financial
statements. They include:

 PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changes in Methods
of Disposal (Amendments)
The amendment is applied prospectively and clarifies that changing from a disposal through
sale to a disposal through distribution to owners and vice-versa should not be considered to be
a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no
interruption of the application of the requirements in PFRS 5. The amendment also clarifies
that changing the disposal method does not change the date of classification.

 PFRS 7, Financial Instruments: Disclosures - Servicing Contracts (Amendments)

PFRS 7 requires an entity to provide disclosures for any continuing involvement in a
transferred asset that is derecognized in its entirety. The amendment clarifies that a servicing
contract that includes a fee can constitute continuing involvement in a financial asset. An
entity must assess the nature of the fee and arrangement against the guidance for continuing
involvement in PFRS 7 in order to assess whether the disclosures are required.
The amendment is to be applied such that the assessment of which servicing contracts
constitute continuing involvement will need to be done retrospectively. However, comparative
disclosures are not required to be provided for any period beginning before the annual period in
which the entity first applies the amendments.

 PFRS 7 - Applicability of the Amendments to PFRS 7 to Condensed Interim Financial

Statements (Amendments)
 This amendment is applied retrospectively and clarifies that the disclosures on offsetting of
financial assets and financial liabilities are not required in the condensed interim financial
report unless they provide a significant update to the information reported in the most recent
annual report.

 PAS 19, Employee Benefits - Regional Market Issue Regarding Discount Rate (Amendments)
This amendment is applied prospectively and clarifies that market depth of high quality
corporate bonds is assessed based on the currency in which the obligation is denominated,
rather than the country where the obligation is located. When there is no deep market for high
quality corporate bonds in that currency, government bond rates must be used.

 PAS 34, Interim Financial Reporting - Disclosure of Information ‘Elsewhere in the Interim
Financial Report’ (Amendments)
The amendment is applied retrospectively and clarifies that the required interim disclosures
must either be in the interim financial statements or incorporated by cross-reference between
the interim financial statements and wherever they are included within the greater interim
financial report (e.g., in the management commentary or risk report).

Standards and interpretation issued but not yet effective

Pronouncements issued but not yet effective are listed below. Unless otherwise indicated, the
Company does not expect that the future adoption of the said pronouncements to have a significant
impact on its financial statements. The Company intends to adopt the following pronouncements
when they become effective.

Effective beginning on or after January 1, 2017

 Amendment to PFRS 12, Clarification of the Scope of the Standard (Part of Annual
Improvements to PFRSs 2014 - 2016 Cycle)
The amendments clarify that the disclosure requirements in PFRS 12, other than those relating
to summarized financial information, apply to an entity’s interest in a subsidiary, a joint
venture or an associate (or a portion of its interest in a joint venture or an associate) that is
classified (or included in a disposal Company that is classified) as held for sale.

The amendments do not have any impact on the Company’s financial position and results of
operation. The Company will include the required disclosures in its 2017 financial statements.

 Amendments to PAS 7, Statement of Cash Flows, Disclosure Initiative

The amendments to PAS 7 require an entity to provide disclosures that enable users of
financial statements to evaluate changes in liabilities arising from financing activities,
including both changes arising from cash flows and non-cash changes (such as foreign
exchange gains or losses). On initial application of the amendments, entities are not required
to provide comparative information for preceding periods. Early application of the
amendments is permitted.

Application of amendments will result in additional disclosures in the 2017 financial

statements of the Company.

 Amendments to PAS 12, Income Taxes, Recognition of Deferred Tax Assets for Unrealized
Losses

The amendments clarify that an entity needs to consider whether tax law restricts the sources
of taxable profits against which it may make deductions on the reversal of that deductible
temporary difference. Furthermore, the amendments provide guidance on how an entity
should determine future taxable profits and explain the circumstances in which taxable profit
may include the recovery of some assets for more than their carrying amount.
 Entities are required to apply the amendments retrospectively. However, on initial application
of the amendments, the change in the opening equity of the earliest comparative period may
be recognized in opening retained earnings (or in another component of equity, as
appropriate), without allocating the change between opening retained earnings and other
components of equity. Entities applying this relief must disclose that fact. Early application
of the amendments is permitted.

These amendments are not expected to have any impact on the Company.

Effective beginning on or after January 1, 2018

 Amendments to PFRS 2, Share-based Payment, Classification and Measurement of Share-

based Payment Transactions

The amendments to PFRS 2 address three main areas: the effects of vesting conditions on the
measurement of a cash-settled share-based payment transaction; the classification of a share-
based payment transaction with net settlement features for withholding tax obligations; and
the accounting where a modification to the terms and conditions of a share-based payment
transaction changes its classification from cash settled to equity settled.

On adoption, entities are required to apply the amendments without restating prior periods, but
retrospective application is permitted if elected for all three amendments and if other criteria
are met. Early application of the amendments is permitted.

These amendments are not expected to have any impact on the Company considering that the
Company does not have any share-based compensation payments.

 Amendments to PFRS 4, Insurance Contracts, Applying PFRS 9, Financial Instruments, with

PFRS 4

The amendments address concerns arising from implementing PFRS 9, the new financial
instruments standard before implementing the forthcoming insurance contracts standard.
They allow entities to choose between the overlay approach and the deferral approach to deal
with the transitional challenges. The overlay approach gives all entities that issue insurance
contracts the option to recognize in other comprehensive income, rather than profit or loss, the
volatility that could arise when PFRS 9 is applied before the new insurance contracts standard
is issued. On the other hand, the deferral approach gives entities whose activities are
predominantly connected with insurance an optional temporary exemption from applying
PFRS 9 until the earlier of application of the forthcoming insurance contracts standard or
January 1, 2021.

The overlay approach and the deferral approach will only be available to an entity if it has not
previously applied PFRS 9.

The amendments are not applicable to the Company since does not have activities that are
predominantly connected with insurance or issue insurance contracts.

 PFRS 15, Revenue from Contracts with Customers

PFRS 15 establishes a new five-step model that will apply to revenue arising from contracts
with customers. Under PFRS 15, revenue is recognized at an amount that reflects the
consideration to which an entity expects to be entitled in exchange for transferring goods or
services to a customer. The principles in PFRS 15 provide a more structured approach to
measuring and recognizing revenue.
 The new revenue standard is applicable to all entities and will supersede all current revenue
recognition requirements under PFRSs. Either a full or modified retrospective application is
required for annual periods beginning on or after January 1, 2018.
These amendments are not expected to have any impact on the Company considering that the
Company does not have any revenue arising from contracts with customers.

 PFRS 9, Financial Instruments

PFRS 9 reflects all phases of the financial instruments project and replaces PAS 39,
FinancialInstruments: Recognition and Measurement, and all previous versions of PFRS 9.
The standard introduces new requirements for classification and measurement, impairment,
and hedge accounting. PFRS 9 is effective for annual periods beginning on or after
January 1, 2018, with early application permitted. Retrospective application is required, but
providing comparative information is not compulsory. For hedge accounting, the
requirements are generally applied prospectively, with some limited exceptions.

The adoption of PFRS 9 will have an effect on the classification and measurement of the
Company’s financial assets and impairment methodology for financial assets, but will have no
impact on the classification and measurement of the Company’s financial liabilities. The
adoption will also have an effect on the Company’s application of hedge accounting and on
the amount of its credit losses.

The Company is currently assessing the impact of adopting this standard.

 Amendments to PAS 28, Measuring an Associate or Joint Venture at Fair Value (Part of
Annual Improvements to PFRSs 2014 - 2016 Cycle)

The amendments clarify that an entity that is a venture capital organization, or other
qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to
measure its investments in associates and joint ventures at fair value through profit or loss.
They also clarify that if an entity that is not itself an investment entity has an interest in an
associate or joint venture that is an investment entity, the entity may, when applying the equity
method, elect to retain the fair value measurement applied by that investment entity associate
or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries.
This election is made separately for each investment entity associate or joint venture, at the
later of the date on which (a) the investment entity associate or joint venture is initially
recognized; (b) the associate or joint venture becomes an investment entity; and (c) the
investment entity associate or joint venture first becomes a parent. The amendments should
be applied retrospectively, with earlier application permitted.

The Company does not expect the amendments to have material impact on its financial
statements.

 Amendments to PAS 40, Investment Property, Transfers of Investment Property

The amendments clarify when an entity should transfer property, including property under
construction or development into, or out of investment property. The amendments state that a
change in use occurs when the property meets, or ceases to meet, the definition of investment
property and there is evidence of the change in use. A mere change in management’s
intentions for the use of a property does not provide evidence of a change in use. The
amendments should be applied prospectively to changes in use that occur on or after the
beginning of the annual reporting period in which the entity first applies the amendments.
Retrospective application is only permitted if this is possible without the use of hindsight.
 The Company does not expect the amendments to have material impact on its financial
statements.

 Philippine Interpretation IFRIC-22, Foreign Currency Transactions and Advance

Consideration

The interpretation clarifies that in determining the spot exchange rate to use on initial
recognition of the related asset, expense or income (or part of it) on the derecognition of a
non-monetary asset or non-monetary liability relating to advance consideration, the date of the
transaction is the date on which an entity initially recognizes the nonmonetary asset or non-
monetary liability arising from the advance consideration. If there are multiple payments or
receipts in advance, then the entity must determine a date of the transactions for each payment
or receipt of advance consideration. The interpretation may be applied on a fully retrospective
basis. Entities may apply the interpretation prospectively to all assets, expenses and income in
its scope that are initially recognized on or after the beginning of the reporting period in which
the entity first applies the interpretation or the beginning of a prior reporting period presented
as comparative information in the financial statements of the reporting period in which the
entity first applies the interpretation.

The Company does not expect the amendments to have material impact on its financial
statements.

Effective beginning on or after January 1, 2019

 PFRS 16, Leases

Under the new standard, lessees will no longer classify their leases as either operating or
finance leases in accordance with PAS 17, Lease. Rather, lessees will apply the single-asset
model. Under this model, lessees will recognize the assets and related liabilities for most
leases on their balance sheets, and subsequently, will depreciate the lease assets and recognize
interest on the lease liabilities in their profit or loss. Leases with a term of 12 months or less
or for which the underlying asset is of low value are exempted from these requirements.

The accounting by lessors is substantially unchanged as the new standard carries forward the
principles of lessor accounting under PAS 17. Lessors, however, will be required to disclose
more information in their financial statements, particularly on the risk exposure to residual
value.

Entities may early adopt PFRS 16 but only if they have also adopted PFRS 15. When
adopting PFRS 16, an entity is permitted to use either a full retrospective or a modified
retrospective approach, with options to use certain transition reliefs.

The Company does not expect the amendments to have material impact on its financial
statements.

Deferred effectivity

 Amendments to PFRS 10 and PAS 28, Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture

The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of
control of a subsidiary that is sold or contributed to an associate or joint venture. The
amendments clarify that a full gain or loss is recognized when a transfer to an associate or
joint venture involves a business as defined in PFRS 3, Business Combinations. Any gain or
loss resulting from the sale or contribution of assets that does not constitute a business,
 however, is recognized only to the extent of unrelated investors’ interests in the associate or
joint venture.

On January 13, 2016, the Financial Reporting Standards Council postponed the original
effective date of January 1, 2016 of the said amendments until the International Accounting
Standards Board has completed its broader review of the research project on equity accounting
that may result in the simplification of accounting for such transactions and of other aspects of
accounting for associates and joint ventures.
Summary of Significant Accounting Policies
The following accounting policies were applied in the preparation of the Company’s financial
statements:

Current and Noncurrent Classification

The Company presents assets and liabilities in the statement of financial position based on current/
noncurrent classification. An asset is current when it is:

 expected to be realized or intended to be sold or consumed in the normal operating cycle;

 held primarily for the purpose trading;
 expected to be realized within twelve months after the reporting period; or
 cash and cash equivalents unless restricted from being exchanged or used to settle a liability
for at least twelve months after the reporting period.

All other assets are classified as noncurrent.

A liability is current when:

 it is expected to be settled in normal operating cycle;

 it is held primarily for the purpose trading;
 it is due to be settled within twelve months after the reporting period; or
 there is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.

The Company classifies all other liabilities as noncurrent.

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

Financial Assets and Financial Liabilities

Date of Recognition
The Company recognizes a financial asset or a financial liability in the statement of financial
position when it becomes a party to the contractual provisions of the instrument. Purchases or
sales of financial assets that require delivery of assets within the time frame established by
regulation or convention in the marketplace are recognized on the settlement date.

Initial Recognition and Classification of Financial Instruments

Financial assets and liabilities are recognized initially at fair value. The initial measurement of
financial instruments, except for those financial assets and liabilities at fair value through profit or
loss (FVPL), includes transaction costs.

On initial recognition, the Company classifies its financial assets in the following categories:
financial assets at FVPL, loans and receivables, held-to-maturity (HTM) investments and
available-for-sale (AFS) financial assets, as appropriate. Financial liabilities, on the other hand,
are classified as financial liability at FVPL and other financial liabilities, as appropriate. The
classification depends on the purpose for which the investments are acquired and whether they 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 each reporting date.

Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument or
a component that is a financial liability are reported as expense or income. Distributions to
holders of financial instruments classified as equity are charged directly to equity net of any
related income tax expense or benefit.

As of December 31, 2016 and 2015, the Company’s financial assets and financial liabilities are in
the form of loans and receivables and other financial liabilities only.

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They arise when the Company provides money, goods or
services directly to a debtor with no intention of trading the receivables. After initial
measurement, loans and receivables are subsequently carried at amortized cost using the effective
interest rate method less any allowance for impairment. Gains and losses are recognized in profit
or loss when the loans and other receivables are derecognized or impaired, as well as through the
amortization process.

As of February 2020 and January 2020, the Company’s loans and other receivables consist of
“Receivables” in the statements of financial position.

Other Financial Liabilities

Other financial liabilities are initially recorded at fair value, less directly attributable transaction
costs. After initial recognition, other financial liabilities are subsequently measured at amortized
cost using the effective interest method. Amortized cost is calculated by taking into account any
issue costs, and any discount or premium on settlement. Gains and losses are recognized in profit
or loss when the liabilities are derecognized, as well as through the amortization process.

As of February 2020 and January 2020, other financial liability consists of “Accounts payable and
accrued expenses”; excluding “Statutory payables”.

Determination of Fair Value

The fair value of financial instruments that are actively traded in organized financial markets is
determined by reference to quoted market bid prices at the close of business on the reporting date.
For investments and all other financial instruments where there is no active market, fair value is
determined using generally acceptable valuation techniques. Such techniques include using arm’s
length market transactions; reference to the current market value of another instrument, which are
substantially the same; discounted cash flow analysis and other valuation models.

“Day 1” Difference
Where the transaction price in a non-active market is different from the fair value from 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 and fair value (a “Day 1” difference) in profit or loss unless it
qualifies for the recognition as some other type of asset. In cases where use is made of data which
is not observable, the difference between the transaction price and model value is only recognized
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 amount.

Impairment of Financial Assets

The Company assesses at each reporting date whether there is objective evidence that a financial
asset or 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 occurred after the initial recognition of the asset (an incurred “loss event”) and
that loss event (or events) has an impact on the estimated future cash flows of the financial asset or
the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the contracted parties or a group of
contracted parties is experiencing significant financial difficulty, default or delinquency in interest
or principal payments, the probability that they will enter bankruptcy or other financial
reorganization, and where observable data indicate that there is measurable decrease in the
estimated future cash flows such as changes in arrears or economic conditions that correlate with
defaults.

Loans and Receivables

The Company first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant.

If there is objective evidence that an impairment loss on loans and receivables carried at amortized
cost has been incurred, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial asset’s original effective interest
rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the
asset shall be reduced either directly or through use of an allowance account. The amount of the
loss shall be recognized in profit or loss.

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. Assets that are individually assessed for impairment and for which an impairment
loss is or continues to be recognized are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed. 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.

In relation to receivables, a provision for impairment is made when there is no objective evidence
(such as the probability of insolvency or significant financial difficulties of the debtor) that the
Company will not be able to collect all of the amounts due under the original terms of the invoice.
The carrying amount of the receivables is reduced through use of an allowance account. Impaired
debts are derecognized when they are assessed as uncollectible.

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;
 the Company retains the right 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 rights 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 rights 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.

Where continuing involvement takes the form of a written and/or purchased option (including a
cash-settled option or similar provision) on the transferred asset, the extent of the Company’s
continuing involvement is the amount of the transferred asset that the Company may repurchase,
except that in the case of a written put option (including a cash-settled option or similar provision)
on asset measured at fair value, the extent of the Company’s continuing involvement is limited to
the lower of the fair value of the transferred asset and the option exercise price.

Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or has 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, and the difference in the respective carrying amount is
recognized in profit or loss.

Offsetting of Financial Assets and Financial Liabilities

Financial assets and financial liabilities are offset and the net amount 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 assets and liabilities are presented gross in the statement of financial position.

Related Parties Transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control
or are controlled by or under common control with the Company, including holding companies,
subsidiaries and fellow subsidiaries, are related parties of the Company. Associates and
individuals owning, directly or indirectly, an interest in the voting power of the Company that
gives them significant influence over the enterprise, key management personnel, including
directors and officers of the Company and close members of the family of these individuals, and
companies associated with these individuals also constitute related parties. In considering each
possible related entity relationship, attention is directed to the substance of the relationship and not
merely the legal form.

Equity
Share capital
The Company has issued share capital that is classified as equity. Incremental costs directly
attributable to the issuance of new capital stock are shown in equity as a deduction, net of tax,
from the proceeds.

Where the Company purchases its own capital stock (treasury shares), the consideration paid,
including any directly attributable incremental costs (net of applicable taxes) is deducted from
equity.
Amount of contribution in excess of par value is accounted for as an additional paid-in capital.

Deficit
The amount included in deficit includes profit (loss) attributable to the Company’s equity holders
and dividends on capital stock. Dividends on capital stock are recognized as a liability and
deducted from equity when they are approved by the Company’s stockholders. Interim dividends,
if any, are deducted from equity when they are paid. Dividends for the year that are approved
after the reporting date are dealt with as an event after the reporting date.
Deficit may also include effect of changes in accounting policy as may be required by the
standard’s transitional provisions. Deficit may be appropriated for any investments and funding of
certain reserve accounts to be established pursuant to the requirements of the lenders in
accordance with the agreement. When appropriation is no longer needed, it is reversed.

Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received or receivable, excluding discounts, rebates, and sales taxes or duty, as
applicable. The Company assesses its revenue arrangements against specific criteria in order to
determine if it is acting as principal or agent. The Company has concluded that it is acting as
principal in all of its revenue arrangements.

Expenses
Expenses are decreases in economic benefits during the accounting period in the form of outflows
or decreases of assets or incurrence of liabilities that result in decreases in equity, other than those
relating to distributions to equity participants. Expenses are generally recognized when the
service is used or the expenses incurred.

Income Taxes
Current Income Tax
Current income tax assets and current income tax liabilities for the current and prior periods are
measured at the amount expected to be recovered from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount are those that have been enacted or substantively
enacted as of the reporting date.

Deferred Tax
Deferred tax is provided, using the balance sheet liability method, on all temporary differences at
the reporting date between the tax bases of assets and liabilities and their carrying amount for
financial reporting purpose. Deferred tax assets are recognized for all deductible temporary
differences, carryforward benefits of the excess of minimum corporate income tax (MCIT) over
the regular corporate income tax (RCIT) and unused tax losses from net operating loss carryover
(NOLCO), to the extent that it is probable that sufficient future taxable profits will be available
against which the deductible temporary differences and the carryforward benefits of excess MCIT
and NOLCO can be utilized.

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

Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to
apply in the period when the asset is realized or the liability is settled, based on tax rates and tax
laws that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to
offset current tax assets against current tax liabilities and the deferred taxes relate to the same
taxable entity and the same taxation authority.

Provisions
Provisions, if any, 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. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, 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 an interest expense. Where the Company expects a provision to be reimbursed,
reimbursement is recognized as a separate asset but only when the receipt of the reimbursement is
virtually certain. The expense relating to any provision is presented in profit or loss, net of any
reimbursement.

Contingencies
Contingent liabilities are not recognized in the financial statements but are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets
are not recognized in the financial statements but disclosed in the notes to financial statements
when an inflow of economic benefits is probable. Contingent assets are assessed continually to
ensure that developments are appropriately reflected in the financial statements. If it has become
virtually certain that an inflow of economic benefits will arise, the asset and the related income are
recognized in the financial statements.

Events after the Reporting Date

Events after the reporting date that provide additional information about the Company’s position
at the reporting date (adjusting events) are reflected in the financial statements. Events after the
reporting date that are not adjusting events are disclosed when material.
3. Significant Accounting Judgments and Estimates

The preparation of the financial statements in accordance with PFRS requires the Company to
exercise judgment, make accounting estimates and use assumptions that affect the reported
amounts of assets, liabilities, income and expenses and disclosure of contingent assets and
contingent liabilities. Future events may occur which will cause the assumptions used in arriving
at the accounting estimates to change.

The effects of any change in accounting estimates are reflected in the Company financial
statements as they become reasonably determinable. Accounting assumptions, estimates and
judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.

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

Going Concern Assessment Agent

Management made an assessment of the Company’s ability to continue as a going concern and is
satisfied that the Company has variable plans and resources to continue in business for the
foreseeable future. The management is not aware of any material uncertainty that may cast
significant doubt upon the Company’s ability to continue as a going concern.

Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainties 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 as follows:

Estimating Allowance for Impairment Losses of Loans and Receivables

The Company assesses on a regular basis if there is objective evidence of impairment of loans and
receivables. The amount of impairment loss is measured as the difference between the asset’s
carrying amount and the present value of the estimated future cash flows discounted at the asset’s
original effective interest rate. The determination of impairment requires the Company to estimate
the future cash flows based on certain assumptions, as well as to use judgment in selecting an
appropriate rate in discounting. The Company uses specific impairment on its loans and
receivables. The Company did not assess its loans and receivables for collective impairment due
to few counterparties which can be specifically identified. The amount of loss is recognized in
profit or loss with a corresponding reduction in the carrying value of the loans and receivables
through an allowance account.

No provision for impairment losses was recognized in February 2020 and January 2020.

Estimating realizability of deferred tax assets

The Company reviews the carrying amounts of deferred tax at each reporting date and reduces the
amounts to the extent that it is no longer probable that sufficient future taxable profits will be
available to allow all or part of the deferred tax asset to be utilized. As of February 2020 and
January 2020, the Company did not recognize deferred income tax asset on Net Operating Loss
Carry-Over or NOLCO since management believes that no sufficient taxable income will be
available in the year these are expected to be reversed, settled or realized.
4. Receivables

February 2020 January 2020

Receivables – non-trade P3,948,790 P3,936,970

Receivables – non-trade includes receivables from affiliates, shareholders, officers and directors
(other than loans and dividends).

5. Accounts payable and Accrued expenses

February 2020 January 2020

Accounts payable – non-trade P22,320 P−
Accrued expenses 10,000 10,000
P** Expression is P** Expression is
faulty ** faulty **

Accounts payable – non-trade includes payables to affiliates, shareholders, officers and directors
(other than loans and dividends).

Accrued expense pertains to unpaid professional fee which is normally paid in the month
following the month of accrual.

6. Share Capital

February 2020 January 2020

Authorized share capital P10,500,000.00 P10,500,000.00
Subscribed share capital P10,500,000.00 P10,500,000.00
Paid up P10,500,000.00 P10,500,000.00
Par value 100 100

Capital Management
The primary objective of the Company’s capital management is to ensure that it maintains a strong
credit rating and healthy capital ratios in order to support its business and maximize shareholder
value. The Company manages its capital structure and makes adjustments to it, in light of changes
in economic conditions.

To maintain or adjust the capital structure, the Company may adjust the dividend payment to
shareholders, or issue new shares. No changes were made in the objectives, policies or processes
during the year. The Company considers equity as capital. The Company is not subject to
externally imposed capital requirements.

The Company considers the following as capital:

February 2020 January 2020

Capital stock P10,500,000.00 P10,500,000.00
Deficit (6,583,530) (6,573,030)
P3,916,470 P3,926,970
7. Income Tax

As of February 2020, the Company’s NOLCO which can be carried over and applied against
future taxable income as follows.

Period of Amoun Expire

Recognition Availment Period t Applied d Balance
January 2020- February
2020 2020 32,320 - - 32,320

As of February 2020 and January 2020, the Company did not recognize deferred income tax asset
on NOLCO since management believes that no sufficient taxable income will be available in the
year these are expected to be reversed, settled or realized.

8. Financial Instruments

Financial Risk Management Objectives and Policies

The main purpose of the Company’s financial instruments is to fund its operations and capital
expenditures. The main risks arising from the Company’s financial instruments are liquidity risk
and credit risk. The Company does not actively engage in the trading of financial assets for
speculative purposes nor does it write options.

Liquidity risk
Liquidity or funding risk is the risk that an entity will encounter difficulty in raising funds to meet
commitments associated with financial instruments. The Company’s exposure to liquidity risk
relates primarily to its short-term obligations.

The Company seeks to manage its liquidity profile by maintaining cash at a certain level and
ensuring the availability of ample unused revolving credit facilities from banks as back-up
liquidity that will enable it to finance its general and administrative expenses and operations.
The Company maintains a level of cash deemed sufficient to finance operations. As part of its
liquidity risk management, the Company regularly evaluates its projected and actual cash flows.

The table below shows the maturity profile of the financial liabilities of the Company as of
December 31, 2016 and 2015 based on the remaining period at the reporting date to their
contractual maturities and are also presented based on contractual undiscounted repayment
obligations.

February 2020

More than
Within One One
On Demand (1) Month (1) Month Total
Financial Liability:
Accounts payable and
accrued expenses
Nontrade P− P22,320 P− P0
** Expression
Accrued expenses − 10,000 − is faulty **
P** P**
Expression is Expression is
P− faulty ** P− faulty **
January 2020

On Demand More than Total

Within One One
(1) Month (1) Month
Financial Liability:
Accounts payable and
accrued expenses
Nontrade P− P− P− P−
** Expression
Accrued expenses − 10,000 − is faulty **
P** Expression P** Expression
P− is faulty ** P− is faulty **

Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation
and cause the other party to incur a financial loss.

The Company is exposed to credit risk from its operating activities, thus its outstanding
receivables are continuously monitored separately. Periodic analyses of the accounts are made to
determine if the account needed a stricter collection effort. Both aged and disconnected accounts
are treated with greater collection efforts to lessen the recovery risk of these accounts.

The table below shows the gross maximum exposure to credit risk of each class of financial assets,
without considering the effects of collateral, credit enhancements and other credit risk mitigation
techniques as at:

February 2020 January 2020

Receivables P3,948,790 P3,936,970

High grade receivables pertain to those receivables from stockholders. Standard grade receivable
includes those that are collected on their due dates even without an effort from the Company to
follow them up. Past due receivables include those that are either past due but still collectible or
determined to be individually impaired.

Management believes that all its financial assets are of high grade and of good credit quality. High
grade financial assets are those which have high probability of collection and realization, as
evidenced by the counterparties having the ability to satisfy their obligations.

Receivables that are neither past due nor impaired as of February 2020 and January 2020 is
P3,948,790 and P3,936,970 respectively.

Fair Value of Financial Instruments

The fair value of the Company’s financial instruments approximates the carrying amount as of
February 2020 and January 2020.

Financial Assets
Due to the short-term nature of the transaction, the fair values of “Receivables” approximate the
carrying values at year-end.
 Financial Liabilities
Due to the short-term nature of “Accounts payable and accrued expenses” their carrying values
approximate fair value.

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 markets for identical assets or liabilities
Level 2: Other techniques for which all inputs which have a significant effect on the recorded
fair value are observable, either directly or indirectly
Level 3: Techniques which use inputs which have a significant effect on the recorded fair value
that are not based on observable market data.

As of February 2020 and January 2020, the Company has no financial asset and liability carried at
fair value. There were no transfers among Levels 1, 2 and 3 in February and January 2020.

9. Supplemental Information Under Revenue Regulations (RR) 15-2010

RR 15-2010, which became effective November 25, 2010, amended certain provisions of
RR 21-2002 prescribing the manner of compliance with any documentary and/or procedural
requirements in connection with the preparation and submission of financial statements
accompanying the income tax returns.

The Company reported and/or paid the following types of taxes for 2016:

a. Taxes and Licenses

BIR annual registration fee 500

Taxes and licenses are recorded as “Taxes and licenses” account in the cost and operating
expenses under Statement of Comprehensive Income.

b. Tax assessments

The Company has no tax assessments as of December 31, 2016 on all open tax years.

c. Tax cases

The Company has no outstanding tax cases in any other court or bodies outside of the BIR as
of February 29, 2020.