Galvez, John Christian B.

Auditing: Specialized Industry

BSA-4A Prof. Lester Limheya

WASTING Assets - Search for several industries that utilizes these industries (must be unique per student)
Industries that utilize wasting assets:
 Retail Industry (Shelves, carts, baskets, cash registers, building being used as a retail
store, and other fixed assets are wasting assets within this industry)
 Real Estate Industry (The real-estate they sell, which could be homes, buildings, or
factories in which all are depreciable that falls under wasting assets, except if the business
only sells land.)
 Information Technology Industry (The equipment being utilized by this industry are
generally computers or laptops in which falls under wasting assets)

Ayala Land, Inc. (Real Estate Industry)

With the chosen business answer the following:
1. Difference between accrual basis and Depletion in regards to accounting treatment
Accrual basis accounting, is a method where an entity records or recognizes revenue or expense
even if goods or services are not yet received (revenue) or given (expense). Depletion uses an accrual
technique to allocate costs of extracting natural resources such as oil and minerals, this type of accounting
treatment is commonly used in mining industries. Depletion is a non-cash expense, meaning it is only an
expense contrary to the asset, and is only used for natural resources, while accrual accounting is used for
recording expenses and revenues.
2. Requirements of the industry to comply to the sustainability audit mandate of SEC
Sustainability Report
According to SEC’s Memorandum Circular no. 4, to assess the Economic, Environmental, and
Social aspects of publicly listed companies, they are required to issue a Sustainability Report in
accordance to the Sustainability Reporting Principles. Provided in this circular, are the Principles of
Sustainability Reporting as well as its Framework.
3. Inherent risk available to said industry during the pandemic
 Obsolescence – Due to the pandemic, some business operations were ceased due to tight
lockdowns. Operations may be ceased but the useful-life of these homes or products
presented by the real-estate company continues, it still depreciates overtime.
 Change in demand – Due to pandemic making people being more concerned about their
hygiene, they may not be able to give time to check out these real-estate products from
face to face for there are physical contact risks involved, demands may fall.
 Lower profit – Due to the pandemic shutting down operations of different businesses, they
are not able to produce profit without any operation, and the time when businesses are
able to would be decided by the government.
4. ISSUES in going concern within the business (if any)
None