REVIEWER IN CFAS
PFRS 11 – Joint Arrangements
All parties to a joint arrangement SHALL apply
PFRS 11.
An arrangement of which two or more parties have
joint control. – Joint arrangement
The existence of contractual arrangement for
sharing in joint control over an investee
distinguishes interests in joint arrangements from
other investments.
The contractually agreed sharing of control of an
arrangement, which exists only when decisions
about the relevant activities require unanimous
consent of the parties sharing control. – Joint
control
Which of the following is a peculiar characteristic
of a joint arrangement? – Joint control
An entity that participates in a joint arrangement,
regardless of whether that entity has joint control of
the arrangement. – Party to a joint arrangement
Is a joint arrangement whereby the parties that have
joint control of the arrangement have rights to the
assets and obligations for the liabilities, relating to
the arrangement. – Joint operation
Is a joint arrangement whereby the parties that have
joint control of the arrangement have rights to the
net assets of the arrangement. – Joint venture
A separately identifiable financial structure,
including separate legal entities or entities
recognized by statute, regardless of whether those
entities have a legal personality. – Separate vehicle
Recognizes its own assets, liabilities, income and
expenses plus its share in the joint operation’s
assets, liabilities, income and expenses. – Joint
operator
An entity first applies PFRS 11 to determine the
type of arrangement in which it is involved. If the
entity determines that it has an interest in a joint
venture, the entity recognizes the interest as an
investment and account for it under equity method
under PAS 28.
PFRS 12 – Disclosures of Interests in Other
Interests
The objective of PFRS 12 is to prescribe the
minimum disclosure requirements for an entity’s
interests in other entities, particularly
a) the nature of and risks associated with those
interests, AND
b) the effects of those interests on the entity’s
financial statements
An entity considers the level of detail and emphasis
placed on the disclosure requirements necessary to
meet the objective of PFRS 12 and provides
additional information whenever the minimum
disclosures are insufficient to meet the objective.
Refers to involvement that exposes an entity to
variability of returns from the performance of
another entity. It is evidenced by the holding of
equity or debt instruments or other form of
involvement, such as provision of funding, liquidity
support, credit enhancement and guarantees. It
includes the means by which an entity obtains
control, joint control, or significant influence, over
another entity. An entity does not necessarily have
an interest in another entity solely because of a
typical customer-supplier relationship. – Interest in
another entity
PFRS 12 requires disclosure of information
about significant judgments and assumptions
(including changes thereto) that an entity has made
in determining the following:
a) existence of control, joint control, or
significant influence over an investee
b) the type of joint arrangement when the
arrangement has been structured through a
separate vehicle
Investment entity is an entity that:
a) obtains funds from one or more investors
for the purpose of providing those investors
with investment management services;
b) commits to its investors that its business
purpose is to invest funds solely for returns
 from capital appreciation, investment
income, or both; and
c) measures and evaluates the performance of
substantially all of its investments on a fair
value basis
Summary of Minimum Disclosures under PFRS
12
 Significant judgements and assumptions
 Investment activity status
 Interests in subsidiaries
 Interests in joint arrangements and
associates
 Interests in unconsolidated structured
entities
The minimum disclosures for an investment in
subsidiary under PFRS 12 include all of the
following except – Share in the profit or loss in the
subsidiary
Which of the following is outside the scope of
PFRS 12? – Held for trading securities
PFRS 12 does not apply to an interest in another
entity that is accounted for in accordance with
PFRS 9 Financial Instruments.
PFRS 13 – Fair Value Measurement
This PFRS provides a single framework for
measuring the fair value of an asset, liability or
equity when other PFRSs require or permit
measurement at fair value or fair value less costs to
sell. It also prescribes the disclosures related to fair
value measurement. – PFRS 13
PFRS 13 does not apply to the following:
a) Share based payment transactions (PFRS 2);
b) Leases (PFRS 16); and
c) Measurements that have some similarities to
fair value but are not fair value
Is the price would be received to sell an asset or
paid to a liability in an orderly transaction between
market participants at the measurement date. – fair
value
Measurement of fair value is also called – market-
to-market” accounting
Fair value measurements are based on – Current
market conditions
Is the market with greatest volume and level of
activity for the asset or liability – Principal market
Is the market that maximizes the amount that would
be received to sell the asset or minimizes the
amount that would be paid to transfer the liability,
after taking into account transaction costs and
transportation costs. – Most advantageous market
Are costs to sell an asset or transfer a liability in the
principal (or most advantageous) market for the
asset or liability that are directly attributable to the
disposal of the asset or the transfer of the liability. –
Transaction costs
Which of the following are not considered
transaction costs or costs to sell? – Transport costs
Are costs that would be incurred to transport an
asset from its current location to its principal (or
most advantageous) market. – Transport costs
Represents the maximum price at which market
participants are willing to buy an asset. – Bid price
Represents the minimum price at which market
participants are willing to sell an asset. – Ask price
Uses prices and other relevant information
generated by market transactions involving similar
assets, liabilities or a group of assets and liabilities.
– Market approach
Reflects the amount that is currently needed to
replace the service capacity of an asset. – Cost
approach
Converts future amounts (cash flows or income and
expenses) to a single current (discounted) amount,
reflecting current market expectations about those
future amounts. – Income approach
Is the use of non-financial asset by market
participants that would maximize the value of the
asset or the group of assets and liabilities within
which the asset would be used. – Highest and best
use
The highest and best use of a non-financial asset
takes into account the following:
a) Physical characteristics of the non-financial
asset (e.g., location or size of the property)
 b) Legal restrictions on the use of the non-
financial asset (e.g., zoning regulations
applicable to the property); and
c) Financial feasibility – whether the use of
the asset generates adequate income or cash
flows.
Transaction price is also called – Entry price
Fair value is also called – Exit price
PFRS 13 provides the fair value hierarchy (order
of priority) that categorizes the inputs to valuation
techniques used in measuring fair value into three
levels.
Quoted prices for identical assets or liabilities in
active markets. – Level 1 inputs
Is a market in which transactions for the asset or
liability take place with sufficient frequency and
volume to provide pricing information on an
ongoing basis. – Active market
Are inputs other than quoted prices included with
Level 1 that are observable for the asset or liability,
either directly or indirectly. – Level 2 inputs
Unobservable outputs that reflect management’s
own assumptions regarding an exit price that a
market participant holding the asset or owing the
liability would make, including assumptions about
risk. – Level 3 inputs
PFRS 14 – Regulatory Deferral Accounts
PFRS 14 is an optional standard that is available
only to first-time adopters.
According to PFRS 14, an entity presents regulatory
deferral accounts in the statement of financial
position. – showing those with debit balances
separately from those with credit balances
1. Scope / To what specific entity and
transactions applicable
The balance of any expense (or income) account
that would not be recognized as an asset or liability
in accordance with other Standards, but that
qualifies for deferral because it is included, or it is
expected to be included, by the rate regulator in
establishing the rate(s) that can be charged to
customers. – Regulatory deferral account balance
A framework for establishing the prices that can be
charged to customers for goods or services and that
framework is subject to oversight and/or approval
by a rate regulator. – Rate regulation
An authorized body that is empowered by statute
or regulation to establish the rate or a range of
rates that bind an entity. It may be a third-party
body or a related party of the entity, including the
entity’s own governing board, if that body is
required by statute or regulation to set rates both in
the interest of the customers and to ensure the
overall financial viability of the entity. – Rate
regulator
PFRS 15 – Revenue from Contracts with
Customers
Certain criteria must be met before a contract with a
customer is accounted for under PFRS 15. Which of
the following precludes a contract from being
accounted for under PFRS 15? – The contract does
not result to a change in the risk, timing or amount
of the entity’s future cash flows.
PFRS 15 applies to contracts wherein the
counterparty is a customer.
An agreement between two or more parties that
creates enforceable rights and obligations. –
Contract
Is a party that has contracted with an entity to obtain
goods or services that are an output of the entity’s
ordinary activities in exchange for consideration. –
Customer
PFRS applies to individual contracts with
customers. However, as a practical expedient, PFRS
15 may also be applied to a group of similar
contracts.
Steps of revenue recognition
Step 1: Identify the contract with the customer.
Step 2: Identify the performance obligations in the
contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the
performance obligations to the contract.
Step 5: Recognize revenue when (or as) the entity expected inputs needed to fully satisfy a
satisfies a performance obligation. performance obligation.

1. Requirements for contract recognition Is the amount of consideration to which an entity

2. Distinct performance obligation expects to be entitled in exchange for transferring
goods or services to a customer, excluding amounts
Contract costs include (a) incremental costs of collected on behalf of third parties. – Transaction
obtaining a contract and (b) costs to fulfill a contract price
Is an entity’s obligation to transfer goods or services Is the price at which a promised good or service can
to a customer for which the entity has received be sold separately to a customer. – Stand-alone
consideration (or the amount is due) from the selling price
customer. – Contract liability
Is an entity’s right to consideration in exchange for
goods or services that the entity has transferred to a
customer when that right is conditioned on
something other than the passage of time (for
example, the entity’s future performance). –
Contract asset
Is an entity’s right to consideration that is
unconditional. – Receivable
Each promise to transfer a distinct good or service is
treated as a separate performance obligation.
The entity evaluates the market where the goods
or services are sold and estimates the price that a
customer would be willing to pay for those goods or
services. This may also include referring to
competitors’ prices for similar goods or services and
adjusting those prices as necessary to reflect the
entity’s costs and margins. – Adjusted market
assessment approach
The entity forecasts the expected cost of satisfying
a performance obligation and then adds an
appropriate margin. – Expected cost plus a margin
approach
The stand-alone selling price of a good or service is
the residual amount after deducting all the stand-
alone selling prices of the other promised goods and
services in the contract from the total transaction
price. – Residual approach
Under output methods, progress is based on direct
measurements of the value of the goods or services
transferred to date relative to the remaining goods
or services promised under the contract.
Under input methods, progress is measured based
on efforts or inputs expended relative to total