NOTES TO FINANCIAL STATEMENTS

(All amounts in Philippine Peso unless otherwise stated)

1. COMPANY INFORMATION
________________is domestic company owned by ________________, single proprietor, with
business address at ________________. The Company was registered in Bureau of Internal
Revenue on ________________with Tax Identification Number ________________.
The financial statements of the Company as of and for the year ended December 31, 2019 were
authorized for issue by the Owner on ________________.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are
set out below.
These policies have been consistently applied to all years presented, unless otherwise stated.

2.1 Basis of Preparation

The financial statements of the Company have prepared on historical cost basis and are
presented in Philippine Peso, which is the Company’s functional and presentation currency.
All values represent absolute amounts except when otherwise indicated.

The accompanying financial statements have been prepared on a going concern basis,
which contemplate the realization of assets and settlement of liabilities in the normal
course of business.

2.2 Statement of Compliance

The accompanying financial statements have been prepared in accordance with Philippine
Financial Reporting Standards for Small Entities (PFRS for SEs).

2.3 Accounting Policies Adopted

In 2018, it is the opinion of the Management that assets and liabilities were recognized at
fair value, hence, these were considered deemed cost.
Financial Assets
Financial Assets include cash.
Cash
Cash are stated at face value.
Property and Equipment

4
Property and equipment are stated at cost, excluding the costs of day-to-day servicing, less
accumulated depreciation and amortization and any impairment in value. The initial cost of
property and equipment comprises its purchase price and any directly attributable cost of
bringing the asset to its working condition and location for its intended use. Expenditures
incurred after the property and equipment have been put into operations, such as repairs
and maintenance and overhaul costs, are normally charged to operations in the period the
costs are incurred. In situations where it can be clearly demonstrated that the expenditures
have resulted in an increase in the future economic benefits expected to be obtained from
the use of an item of property, and equipment beyond its originally assessed standard of
performance, the expenditures are capitalized as additional costs of property and
equipment. Cost also includes any asset retirement obligation and interest on borrowed
funds used. When assets are sold or retired, their costs and accumulated depreciation,
amortization and impairment losses, if any, are eliminated from the accounts and any gain
or loss resulting from their disposal is included in the statement of operations of such
period.
Depreciation and amortization are calculated on a straight-line basis over the estimated
useful lives of the assets. The useful life of each property and equipment is estimated based
on the period over which the asset is expected to be available for use. Such estimation is
based on a collective assessment of industry practice and experience with similar assets.
The assets residual values, useful lives and depreciation and amortization method are
reviewed and adjusted, if appropriate, if there is an indication that there has been
significant change since the last annual reporting date. The useful lives of the depreciable
assets are as follows:
Office and Kitchen Equipment 5 years
Delivery/Service Vehicle 5 years

An item of property and equipment is derecognized upon disposal or when no future

economic benefits are expected from its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the item) is included in the statement of operations in the year
the item is derecognized.

Financial Liabilities

Financial liabilities are recognized initially at transaction price (including transaction costs)
unless the arrangement constitutes, in effect, the financing transaction.

Financial liabilities include Auto Loans Payables.

Auto Loans Payables

Auto Loans Payable are liabilities other than short-term trade payables on normal credit
terms for the purchase of servicing vehicles. These payables are interest bearing. They were
5
 initially measured at the present value of cash payable to the bank, including interest
payments and repayment of principal.

Revenue and Cost Recognition

Revenue is measured at the fair value of the consideration received or receivable. The fair
value of the consideration received or receivable is after deducting the amount of any trade
discounts, prompt settlement discounts and volume rebates allowed by the Company.

The Company included in revenue only the gross inflows of economic benefits received and
receivable on its own account when the amount of revenue can be measured reliably, it is
probable that the economic benefits associated with the transaction will flow to the entity,
and the costs incurred for the transaction and the costs to complete the transaction can be
measured reliably.

Cost and Operating expenses are recognized in the statement of income upon utilization of
the service of in the date they are incurred.

Income taxes

The Company uses the Tax Payable Method in recognizing the current tax assets and
liabilities for the current and past periods and 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 are enacted or substantially enacted by the balance
sheet date.

3. Management’s Significant Accounting Judgment and Estimate

The preparation of the Company’s financial statements in conformity with the Financial
Reporting Framework requires the use of judgment and accounting estimates or assumptions
that affect the amounts reported in the financial statements and accompanying notes.
Judgments are made by Company in the development, selection and disclosure of significant
accounting policies and estimates and the application of these policies and estimates. The
estimates and assumptions are reviewed on an ongoing basis. These are based on Company’s
evaluation of relevant facts and circumstances as of the reporting date. Actual results could
differ from such estimates.

Change in accounting estimates

A change in accounting estimate is an adjustment of the carrying amount of an asset or a

liability, or the amount of the periodic consumption of an asset, that results from the
assessment of the present status of, and expected future benefits and obligations
associated with, assets and liabilities. Changes in accounting estimates result from new
information or new developments and, accordingly, are not corrections of errors. When it is

6
 difficult to distinguish a change in an accounting policy from a change in an accounting
estimate, the change is treated as a change in an accounting estimate.

When a change in an accounting estimate gives rise to changes in assets and liabilities, or
relates to an item of equity, the Company recognized it by adjusting the carrying amount of
the related asset, liability or equity item in the period of the change otherwise, the
Company recognized the effect of a change in an accounting estimate prospectively by
including it in profit or loss in the period of the change, if the change affects that period
only, or the period of the change and future periods, if the change affects both.

4. Property and Equipment

A reconciliation of the carrying amounts at the beginning and end of 2019 and the gross
carrying amounts and the accumulated depreciation and amortization of property and
equipment are shown below:

This account consists of:

2019 2018
Kitchen and Office Equipment
Delivery/Service Vehicle
Total Property and Equipment
Less: Accumulated Depreciation
Carrying Amount

5. Cost of Sales/Services

This account consists of:

2019 2018
Beginning, Inventory - -
Add: Purchases
Cost of Goods Available for Sale
Less: Ending, Inventory
Cost of Sales

6. Operating Expenses

This account consists of:

NOTES 2019 2018

Communication, Light & Water
Depreciation
Fuel & Oil

7
 Interest Expense
Kitchen Supplies Expense
Maintenance Expense
(Operating Expenses as continued) NOTES 2019 2018
Meals Expense
Miscellaneous
Office Supplies Expense
Other Expense
Professional Fees
Salaries & Wages
Taxes & Licenses 7
Transportation and Travel
Total Operating Expenses

7. SUPPLEMENTARY TAX INFORMATION UNDER REVENUE REGULATIONS (RR) 15-2010

The taxes, duties and licenses fees recorded during the taxable year (2019) required under RR
15-2010 are as follows:

Taxes and Licenses consists of:

BIR Annual Registration

Business Permits and Licenses
Total Taxes and Licenses

Value-Added Tax (VAT)

Vatable Sales/Receipt
Sale to Government
Total Sales
VAT
Output Tax

Purchases Qualified for Input Tax

VAT
Input Tax on Current Purchases
Add: Input Tax Carried Over from Previous Period
Total Available Input Tax
Less: Input Tax on Sale to Government closed to Expense *
Total Allowable Input Tax
8
VAT Payable
Less: VAT Withheld on Sales to Government (5%)
Input Tax Carried Over to Next Period

Sale to Government
Multiplied by: Standard Input VAT Rate
Standard Input VAT
Less: Actual Input VAT attributable to sales to Government
*Income on excess of standard input tax to actual input tax