I. Enumerate the complete set of financial statements.

According to PAS 1, the complete set of financial statements are the following:
a) Statement of Financial Position as at the end of the period
b) Statement of Comprehensive Income for the period
c) Statement of Changes in Equity for the period
d) Statement of Cash Flows for the period
e) Notes, comprising a summary of significant accounting policies and other
explanatory information
f) A Statement of Financial Position as at the beginning of the earliest
comparative period when an entity applies an accounting policy retrospectively
or makes a retrospective restatement of items in its financial statements, or
when it reclassifies items in its financial statements.

IV. Proforma Statement of Comprehensive Income including notes.

PROFORMA STATEMENT OF COMPREHENSIVE INCOME INCLUDING NOTES

Princess Ana Josie Corporation

Statement of Comprehensive Income
For the Years December 31, 20x2 and 20x1

Note 20X2 20X1

Revenue (1) xx xx
Cost of Sales (2) xx xx
Gross Profit xx xx
Other Income (3) xx xx
Distribution costs (4) (xx) (xx)
Administrative Expense (5) (xx) (xx)
Other Expenses (6) (xx) (xx)
Finance Costs (xx) (xx)
Share of Profit of Associates xx xx
Profit before tax xx xx
Income Tax Expense (xx) (xx)
Profit for the period for Continuing Operations xx xx
Loss for the year from discontinued Operations (xx) (xx)
Profit for the year xx xx
Other Comprehensive Income:
Other Comprehensive Income that will not be
Reclassified to profit or loss

Gains on valuation xx xx
Remeasurement of defined benefit plans xx xx
Gains and losses from investments in equity
designated at FVTOCI xx xx
Other Comprehensive income on hedging
instruments that hedge investments in equity
instruments measured at FVTOCI xx xx
Change in fair value that of financial liability
attributable to change in the liability’s credit risk xx xx
Share of other comprehensive income of associates
and joint ventures accounted for using equity method
that will not be reclassified to profit or loss xx xx
Income Tax relating to other comprehensive income (xx) (xx)
Other comprehensive income that will be reclassified
to profit or loss
Exchange differences on translation
Exchange differences on translating foreign operations xx xx
Reclassification adjustments on exchange differences
on translation (xx) (xx)
Cash flow hedges
Effective portion of cash flow hedges xx xx
Reclassification adjustments on cash flow hedge (xx) (xx)
Amounts removed from equity and included in
carrying amount of non-financial asset (liability)
whose acquisition or incurrence was hedged highly
probable forecast transaction (xx) (xx)
Change in value of time value of options
Gains (losses) on change in value of time value of options xx xx
Reclassification adjustments on change in value
of forward elements of forward contracts (xx) (xx)
Change in value of forward elements of forward contracts
Gains (losses) on change in value of forward elements
of forward contracts xx xx
Reclassification adjustments on change in value of forward
elements of forward contracts (xx) (xx)
Financial assets measured at fair value through other
comprehensive income
Gains (losses) on financial assets measured at fair value
through other comprehensive income xx xx
Reclassification adjustments on financial assets measured
at fair value through other comprehensive income xx xx
Amounts removed from equity and adjusted against fair
value of financial assets on reclassification out of fair value
through other comprehensive income measurement
category (xx) (xx)
Share of other comprehensive income of associates
and joint ventures accounted for using equity method
that will be reclassified to profit or loss xx xx
Income tax relating to the other comprehensive income (xx) (xx)
Other Comprehensive income, net of income tax xx xx
Total other comprehensive income for the year xx xx
Total comprehensive income for the year xx xx

Profit attributable to: 20X2 20X1

Equity holders of the parent xx xx
Non-controlling interest xx xx
Total xx xx
Earnings per share: 20X2 20X1
Basic xx xx
Diluted xx xx
Total comprehensive income attributable to: 20X2 20X1
Equity holders of the parent xx xx
Non-controlling interest xx xx
xx xx

Note 1 – Revenue 20X2 20X1

Gross sales xx xx
Sales returns and allowances (xx) (xx)
Sales Discounts (xx) (xx)
Total xx xx

Note 2 – Cost of Sales 20X2 20X1

Inventory, January 1 xx xx
Purchases xx xx
Freight in xx xx
Purchase returns and allowances (xx) (xx)
Purchase Discounts (xx) (xx)
Goods available for sale xx xx
Inventory, December 31 (xx) (xx)
Cost of Sales xx xx

Note 3 – Other Income 20X2 20X1

Rental income xx xx
Dividend revenue xx xx
Total xx xx

Note 4 – Distribution costs 20X2 20X1

Freight out xx xx
Salesmen’s commission xx xx
Depreciation – store equipment xx xx
Total xx xx
Note 5 – Administrative expenses 20X2 20X1
Officers’ salaries xx xx
Depreciation – office equipment xx xx
Total xx xx

Note 6 – Other Expenses 20X2 20X1

Loss on sale of equipment xx xx
Loss on sale of investment xx xx
Total xx xx

Problem 36-6 Related Party Disclosure

Required:
1. Identify which of the above companies is a related party of Frozen Throne Company.
Table 1 below shows the companies who are related parties of Frozen Throne
Company. The basis for the selection of such companies is found in Table 2.

Table 1 Related Parties of Frozen Throne Company

Name Description
1. Sand King Co. Post-employment benefit plan established by Frozen
Throne
2. Shadow Fiend Co. Associate
3. Harbringer Co. Subsidiary
4. Night Crawler Co. Subsidiary of Harbringer
5. Disruptor Co. Associate of Harbringer
6. Geomancer Co Parent
7. Jakiro Co. Parent of Geomancer
8. Rylai Co. Sister company of Frozen throne Company
9. Medusa Co. Key Management personnel of Frozen Throne
Company
10. Barathrum Co. Bank
11. Pudge Co. Joint venture of Frozen Throne Company
12. Invoker Co. Joint venture of Frozen Throne Company
 Table 2 Basis for the Selection of Related Parties

In identifying related parties, PAS 24 serves as a guide. Under this standard, it is

stated that parties are related if one party has the ability to affect the financial and
operating decisions of the other party through control, significant influence or joint
control. The examples of related parties are:
1. Parent and its subsidiary
2. Fellow subsidiaries with a common parent
3. Investor and its associate; the associate’s subsidiary
4. Venturer and the joint venture; and the joint venture’s subsidiary
5. A joint venture and an associate of a common investor
6. Key management personnel of the reporting entity or of the reporting entity’s
parent
7. A person who has control, significant influence or joint control over the
reporting entity.
8. Close family member of the person referred to in (6) and (7)
9. Post-employment benefit plan of the employees of either the reporting entity
or an entity related to the reporting entity

PAS 24 also states that the following below are not related party disclosures:

1. Two entities simply because they have one director or key management
personnel in common.
2. Two joint venturers simply because they are co-venturers in a joint venture.
3. Financers, trade unions, public utilities, and government agencies that do not
control, jointly control or significantly influence the reporting entity simply by
virtue of their normal dealings with the entity, even though they may place
some restrictions on the entity or participate in its decision-makings.
4. A customer, supplier, or other business that the entity does significant
transactions with, simply because of economic dependence.

2. Of the related party identified, which company(ies) needs to be identified and

disclosed regardless whether there is a transaction to Frozen Company.
According to PAS 24, a parent-subsidiary relationship is disclosed even if there have
been no transactions between them during the period. An entity must disclose the
name of its parent, and if different, the name of the ultimate parent or ultimate
controlling party. Thus, Frozen Throne Company should disclose Jakiro Co., its
ultimate parent or controlling party.
Problem 36-7 Distribution Costs and General and Administrative Expenses
Questions:
Based on the above data, answer the following:
1. What amount should be reported as total distribution costs?
a. P2,014,000 c. P2,375,000
b. P2,139,000 see Table 3 d. P2,389,000

2. What amount should be reported as general and administrative expenses?

a. P1,440,000 c. P1,527,500
b. P1,352,500 d. P1,390,000 see

Table 3 Total Distribution Costs

Below is the calculation of the total distribution costs incurred by the entity:

Advertising P 500,000
Delivery expense 300,000
Rent for office space (500,000 X 1/2) see (My Accounting Course, 2020).
250,000
Sales commissions 1,075,000
Depreciation on delivery truck 14,000
Total distribution costs P2,139,000
Distribution Cost, also called distribution expenses, are costs that are incurred to
make its goods or services available to the end-users or resellers (My Accounting
Course, 2020).
Note 1 :The whole amount of rent for office space is not recognized instead, only
half of the actual amount was used because it was stated that the sales department
only occupied half of the rented premises. In order to get the correct cost, ½ or 50%
should be multiplied by P500,000 which will result to an amount of P250,000.
 Table 4 General and Administrative Expenses

Below is the calculation of general and administrative expenses incurred by the

entity:
Auditing and Accounting fees P 300,000
Officers’ salaries 625,000
Rent for office space (500,000 X 1/2) see Note 2 250,000
Insurance 200,000
Depreciation on office equipment 15,000
Total general and administrative expenses P1,390,000

General and administrative expenses are costs that contribute to the overall

operations of the company and can't be directly related back to selling or making
sales (My Accounting Course, 2020).
Note 2: Since the calculated amount of the rent for office space under distribution
costs is P250,000 or 50% of P500,000, the other half portion of the total cost will be
classified under the general and administrative expenses because this cost is not
associated with selling or distribution expenses.