ALBERTO N.

BOLO
Statements of Financial Position

As at December 31,
Note/s 2019 2018
A S S E T S
Current assets:
Cash 5 ₱ 54,438 ₱ 296,470
Trade receivables 6 224,483 498,850
Unused materials and supplies 161,080 105,380
Total current assets ₱ 440,001 ₱ 900,700

Non-current assets:
Property & equipment – net 7 ₱ 2,400,000 ₱ 2,945,000
Total non-current assets ₱ 2,400,000 ₱ 2,945,000
TOTAL ASSETS ₱ 2,840,001 ₱ 3,845,700

L I A B I L I T I E S & O W N E R ’ S E Q U I T Y
Current liabilities:
Trade & other payables 8 ₱ 93,850 ₱ 80,850
Total current liabilities ₱ 93,850 ₱ 80,850

Owner’s equity:
Owner’s equity ₱ 2,746,151 ₱ 3,764,850
Total owner’s equity ₱ 2,746,151 ₱ 3,764,850
TOTAL LIABILITIES & OWNER’S EQUITY ₱ 2,840,001 ₱ 3,845,700
See accompanying notes to the financial statements
ALBERTO N. BOLO
Statements of Comprehensive Income
For the years ended December 31,
Note/s 2019 2018
Revenue 9 ₱ - ₱ 5,596,872
Cost of service 10 (265,814) (2,108,755)
Gross profit ₱ (265,814) ₱ 3,488,117
General and administrative costs 11 (752,885) (973,267)
Profit before tax ₱ (1,018,699) ₱ 2,514,850
Income tax expense - (654,752)
Profit for the year ₱ (1,018,699) ₱ 1,860,098
See accompanying notes to the financial statements
ALBERTO N. BOLO
Statements of Changes in Owner’s Equity
For the years ended December 31,
2019 2018
Owner’s equity:
Balance at beginning of the year ₱ 3,764,850 ₱ 1,500,000
Add: Profit for the year (1,018,699) 2,514,850
Total ₱ 2,746,151 ₱ 4,014,850
Less: Drawings - (250,000)
Balance at the end of the year ₱ 2,746,151 ₱ 3,764,850
See accompanying notes to the financial statements
ALBERTO N. BOLO
Statements of Cash Flows
For the years ended December 31,
Note/s 2019 2018
Net cash from operating activities:
Profit for the year before tax ₱ (1,018,699) ₱ 2,514,850
Adjustments for:
Depreciation 7 545,000 95,500
Operating income before working capital adjustments ₱ (473,699) ₱ 2,610,350
Changes in operating assets & liabilities:
Decrease (Increase) in:
Trade receivables 274,367 (994,283)
Unused materials and supplies (55,700) (3,180,248)
Increase (Decrease) in:
Trade payables 13,000 (65,800)
Net cash generated from operations ₱ (242,032) ₱ (1,629,981)
Cash paid for income taxes - 71,024
Net cash provided by operating activities ₱ (242,032) ₱ (1,558,957)

Cash flows from financing activities:

Drawings ₱ - ₱ (250,000)
Net cash used in financing activities ₱ - ₱ (250,000)
Net increase (decrease) in cash ₱ (242,032) ₱ (1,808,957)
Cash at beginning of the year 5 296,470 2,105,427
Cash at end of the year 5 ₱ 54,438 ₱ 296,470
See accompanying notes to the financial statements
 ALBERTO N. BOLO
Notes to Financial Statements
As at December 31, 2019 and 2018 and
For the years ended December 31, 2019 and 2018’

1. General Information
1.1 Formation and operation
ALBERTO N. BOLO (the Proprietor) is duly registered with the Department of Trade and Industry
(DTI) and engaged in building construction.

The registered office address of the business is located at BLK 4 Lot 24 Star Gazer St. Highway
2000 San Juan, Taytay Rizal

1.2 Approval on the release of the Financial Statements

The financial statements of the Proprietor as at and for the year ended December 31, 2019 (including
comparative amounts as at and for the year ended December 31, 2018) were approved and
authorized for issue by the Proprietor on March 11, 2019.

1. Basis of Preparation
The accompanying financial statements of the Proprietor have been prepared using the measurement bases
for each type of asset, liability, income and expense specified by the Philippine Financial Reporting
Standards for Small and Medium-sized Entities (PFRS for SMEs), which have been adopted by the Security
and Exchange Commission (SEC) and
Financial Reporting Standards Council (FRSC) from the pronouncements issued by the International
Accounting Standards Board (IASB).

2.1 Statement of Compliance

The accompanying financial statements of the Proprietor have been prepared in compliance with the
PFRS for SMEs and are prepared for submission to the Bureau of Internal Revenue (BIR).

2.2 Going Concern Assumption

The preparation of the accompanying financial statements of the Proprietor is based on the premise
that the Proprietor operates on a going concern basis which contemplate the realization of assets and
settlement of liabilities in the normal course of business. The Proprietor does not intend to liquidate
nor cease her operations.

2.3 Functional and Presentation Currency

The financial statements are presented in Philippine Pesos (₱), the Proprietor’s functional and
presentation currency, and all values are rounded to the nearest peso except when otherwise
indicated.

Alberto N. Bolo
Notes to the Financial Statements
1. Summary of Significant Accounting Policies
The significant accounting policies that have been used in the preparation of the financial statements are
summarized below and have been applied consistently to all years presented, unless otherwise stated.

3.1 Financial Instruments

A financial instrument is a contract that gives rise to both a financial asset of one entity and a financial
liability or equity instrument of another entity.

Date of Recognition
The Proprietor recognizes a financial asset or a financial liability in the statements of financial
position when he becomes a party to the contractual provisions of the instrument.

Initial Recognition
Financial instruments are recognized initially at transaction price. Transaction costs are included in
the initial measurement of all financial assets and liabilities, except for financial instruments measured
at fair value through profit or loss (FVPL).

Subsequent Measurement
Subsequent measurements of financial instruments are summarized below:

a) Cash
Cash includes demand deposits, and cash funds set aside for current purposes. It is unrestricted in
use and is valued at face value.

b) Basic Debt Instruments

Basic debt instruments are non-derivative financial instruments that entitles the Proprietor to
unconditional collections (in the case of financial assets) or requires the Proprietor to
unconditional payments or prepayments (in the case of financial liabilities) of fixed amount of
return, a fixed rate of return, or a variable rate of return equal to a single reference quoted or
observable rate throughout the life of the instrument.

Subsequent to initial recognition, basic debt instruments are measured at amortized cost using the
effective interest method. Those basic debt instruments classified as current shall be measured at
the undiscounted amount of cash or other consideration expected to be paid or received. Any
change in their value is recognized in profit or loss.

These instruments include trade & other receivables and trade & other payables,

Trade Receivables. Trade receivables refer to claims arising from sales of goods in the
ordinary course of business operations. Other receivables consist of advances to officers,
employees and other third parties which are subject for liquidation within 12 months. At the
end of each reporting period, the carrying amounts of receivables are reviewed to determine
whether there is any objective evidence that the Proprietor will not be able to collect all
amounts due according to the original terms of the receivables. If so, an impairment loss is
recognized immediately in profit or loss.

Trade Payables. Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business and have been invoiced or formally agreed with
suppliers. Other payables includes accrued expenses and other contractual obligations.

De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of financial assets)
is de-recognized when (a) the contractual rights to receive cash flows from the asset have expired; (b)
the Proprietor
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 (c) the Proprietor
has transferred her rights to receive cash flows from the asset and either (1) has transferred

Alberto N. Bolo
Notes to the Financial Statements
 substantially all the risks and rewards of the asset, or (2) has neither transferred nor retained the risks
and rewards of the asset but has transferred the control over the asset.

Financial liabilities are derecognized from the reporting date only when the obligations are
extinguished either through discharge, cancellation or expiration. 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 de-
recognition of the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognized in the statement of comprehensive income. Gains and
losses are recognized in the statement of comprehensive income when liabilities are derecognized as
well as through the amortization process.

Offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there
is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a
net basis or realize the asset and settle the liability simultaneously.

3.2 Inventories
Inventories are assets held for sale in the ordinary course of business, in the process of production for
such sale or in the form of materials or supplies to be consumed in the production process or in the
rendering of services.

3.3 Other Current Assets

Other current assets include input taxes and prepayments. Prepayments are expenses paid in advance
and recorded as assets before they are utilized. These assets are initially recorded at transaction cost
and subsequently measured at cost less any impairment loss. Prepayments that are expected to be
realized within 12 months from the reporting date are classified as current assets; otherwise, these are
classified as non-current assets.

3.4 Property and Equipment

These are tangible assets that are held for use in production or supply of goods or services, for rental
to others, or for administrative purposes, and are expected to be used during more than one period.

Initial Recognition
The initial cost of property, plant and equipment comprises its purchase price, including import duties
and taxes and any directly attributable costs of bringing the assets to their working condition and
location for their intended use.

Depreciation Method
Depreciation of property and equipment is charged so as to allocate the cost of assets less residual
value over their estimated useful lives, using the straight-line method. The estimated useful lives
range as follows:

Asset Estimated Useful Life

Furnitures and Fixtures 2 years

Construction equipment 5 years
Small Tools & equipment 5 years
Service Vehicle 10 years

The estimated useful lives and depreciation method are reviewed periodically to ensure that the period
and method of depreciation and amortization are consistent with the expected pattern of economic
benefits from the items of property, plant and equipment.

De-recognition
Fully depreciated assets are retained in the accounts until they are no longer in use and no further
depreciation are credited or charged to current operations. When assets are retired or otherwise

Alberto N. Bolo
Notes to the Financial Statements
 disposed of, the cost and related accumulated depreciation and accumulated impairment loss, if any, are
removed from the accounts and any resulting gain or loss is credited or charged to current operations.

3.5 Impairment of Assets

If an asset’s carrying amount is higher than its recoverable amount, the asset is judged to have
suffered an impairment loss. The asset shall therefore be written-down to its recoverable amount and
the difference shall be reported as Impairment loss chargeable against operations during the period
the loss was recognized.

Financial Assets
The Proprietor assesses at the end of 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 has 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 group of financial assets that can be reliably estimated. Evidence of impairment
may include indications that the borrower or a group of borrowers 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 a measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with default.

Non-financial Assets
The carrying amounts of the Proprietor’s non-financial assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated.

a) Non-financial Assets other than Inventories

The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value in
use and its fair value less costs to sell. Value in use is the present value of the future cash flows
expected to be derived from an asset or CGU, while fair value less costs to sell is the amount
obtainable from the sale of an asset or CGU in an arm’s length transaction between
knowledgeable, willing parties, less the costs of disposal. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the
asset. For the purpose of impairment testing, assets that cannot be tested individually are
grouped together into the smallest group of assets that generate cash inflows from continuing use
that are largely independent of the cash inflows of other assets or groups of assets or CGUs. An
impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its
estimated recoverable amount. Impairment losses are recognized in profit or loss.

Impairment losses recognized in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if
there has been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortization, if no
impairment loss had been recognized.

3.6 Value-Added Tax (VAT)

Revenues, expenses, assets and liabilities are recognized net of the amount of VAT, except:
 where the VAT incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the VAT is recognized as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
 receivables and payables that are stated with the amount of VAT included.

Output tax pertains to the 12% VAT received or receivable on the local sale of services by the
Proprietor. Input tax pertains to the 12% VAT paid or payable by the Proprietor in the course of her
trade or business on purchase of services. At the end of each taxable period, if output tax exceeds
Alberto N. Bolo
Notes to the Financial Statements
 input tax, the outstanding balance is paid to the taxation authority. If input tax exceeds output tax,
the excess shall be carried over to the succeeding months.

The input and output taxes are presented at gross amounts and are included under ‘Other current
assets’ and ‘Other current liabilities,’ respectively, in the statements of financial position.

3.7 Owner’s Equity

Owner’s equity is the Proprietor’s ownership on her total assets after deducting her total liabilities.
Owner’s equity is increased by additional investment of cash or property and by the net income and
decreased by the withdrawal of cash or other assets and by the net loss.

3.8 Revenue Recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of services
in the ordinary course of the Proprietor’ business. The Proprietor recognizes revenue when the
amount of revenue can be reliably measured, it is probable that future economic benefits will flow to
the entity and when specific criteria have been met for each of the Proprietor’s activities as described
below:

Rendering of Services
Revenue from services rendered is recognized in profit or loss in proportion to the stage of
completion of the transaction at the reporting date. The stage of completion is assessed by reference
to surveys of work performed.

3.9 Cost and Expense Recognition

Costs and expenses are decreases in economic benefits during the accounting period in the form of
outflows or decrease of assets or incurrence of liabilities that result in decreases in equity, other than
those relating to distributions to equity participants. These costs, including all finance costs, are
recognized in the statements of comprehensive income when incurred.

Costs and expenses are recognized in the statements of comprehensive income:

 on the basis of a direct association between the costs incurred and the earning of specific items
of income.
 on the basis of systematic and rational allocation procedures when economic benefits are
expected to arise over several accounting periods and the association can only be broadly or
indirectly determined; or
 immediately when expenditure produces no future economic benefits or when, and to the extent
that, future economic benefits do not qualify or cease to qualify, for recognition in the
statements of financial position as an asset.

3.10 Employee Benefits

Employee benefits are all forms of consideration given by the Proprietor in exchange for services
rendered by employees or for the termination of employment.

Short-term Benefits
These benefits are recognized as expense in the period when the economic benefit is given or as an
asset when such costs may be capitalized and is measured at an undiscounted basis. These include
salaries, wages and social security contributions, leave entitlement, profit-sharing, bonuses, and other
non-monetary benefits.

Employee entitlements to annual leave are recognized as a liability when they are accrued to the
employees. The undiscounted liability for leave expected to be settled wholly before twelve months
after the end of the annual reporting period is recognized for services rendered by employees up to
the end of the reporting period.

Termination Benefits
Termination benefits are employee benefits provided in exchange for the termination of an
employee’s employment as a result of either the Proprietor’s decision to terminate an employee’s
Alberto N. Bolo
Notes to the Financial Statements
 employment before the normal retirement date or an employee’s decision to accept an offer of
benefits in exchange for the termination of employment.

A liability and expense for a termination benefit is recognized at the earlier of when the entity can no
longer withdraw the offer of those benefits and when the entity recognizes related restructuring costs.
Initial recognition and subsequent changes to termination benefits are measured in accordance with
the nature of the employee benefit, as either post-employment benefits, short-term employee
benefits, or other long-term employee benefits.

3.11 Provisions and Contingencies

Provisions are recognized when the Proprietor 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. Where the Proprietor expects some or all of a provision to be reimbursed, the
reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the statements of comprehensive income, net of
any reimbursement. If the effect of time value of money is material, provisions are discounted using
a current pre-tax rate that reflects, 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 a
borrowing cost.

Contingent assets and liabilities are not recognized in the financial statements. Contingent assets are
disclosed in the notes to the financial statements when an inflow of economic benefits is probable
and recognized in the statements of financial position and the related income in the statements of
comprehensive income when an inflow of economic benefits is virtually certain. On the other hand,
contingent liabilities are disclosed in the notes to the financial statements unless the possibility of an
outflow of resources embodying economic benefits is remote.

3.12 Income Tax

Income tax expense for the period comprises of current tax. Income tax is recognized in profit or
loss, except that a change attributable to an item of income or expense as other comprehensive
income is also recognized directly in other comprehensive income.

Current Tax
Current income tax is calculated on the basis of tax rates and laws that have been enacted or
substantively enacted as at reporting date.

3.13 Events After the End of Reporting Period

Any post year-end event up to the date of approval of the Proprietor of the financial statements that
provides additional information about the Proprietor position at the reporting date is reflected in the
financial statements as an adjusting event. Any post year-end event that is not an adjusting event is
disclosed in the notes to the financial statements, when material.

2. Significant Accounting Estimates and Judgments

The preparation of the financial statements in accordance with PFRSs for SMEs requires the Proprietor to
make judgments, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses in the financial statements and related notes.
The judgments, estimates and assumptions are continually evaluated and are based on historical experience
and various other factors that are believed to be reasonable under circumstances, the results of which form
the basis of making the judgments about carrying values of assets and liabilities that are not readily
apparent from other sources. Although these estimates are based on the Proprietor’s best knowledge of
current events and actions, actual results may ultimately differ from these estimates.

2.1 Judgments

Alberto N. Bolo
Notes to the Financial Statements
 In the process of applying the Proprietor accounting policies, she has made the following judgments,
apart from those involving estimation, which have the most significant effect on the amounts recognized
in the financial statements:

a) Repairs and Maintenance

Costs of repairs and maintenance that do not result in an increase in the future economic benefit of
an item of property and equipment is charged to operations in the period it is incurred. Otherwise,
it is capitalized as part of the asset.

b) Provisions and Contingencies

The Proprietor, in the ordinary course of business, sets up appropriate provisions for her present
obligations (legal or constructive) in accordance with her policies on provisions and contingencies.
Policies on recognition and disclosure of provisions, and disclosure of contingencies are discussed
further in other notes.

The Proprietor is not currently involved in any legal proceedings, but is involved in tax audits and
assessments that are normal to her business. Tax audits and assessments may arise from the
uncertainty that exists with respect to the interpretation of complex tax regulations, changes in tax
laws, and the amount and timing of future taxable income. Estimated provisions are established for
possible consequences of audits by the tax authorities which are based on factors such as experience
of previous tax audits, and differing interpretations by the taxable entity and the responsible tax
authority.

The Proprietor does not believe that the outcome of this matter will significantly affect the results of
operations. It is probable, however, that future results of operations could be materially affected by
changes in the estimates or in the effectiveness of the strategies relating to this proceeding.

2.2 Estimates
The following are the key estimates concerning the future, and other key sources of estimation
uncertainty as at the reporting date, that have the most significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next reporting period:

a) Allowance for Impairment of Receivables

The Proprietor maintains an allowance for impairment losses, where objective evidence of
impairment exists, at a level considered adequate to provide for potential uncollectible
receivables. The level of this allowance is evaluated by Proprietor on the basis of factors that
affect the collectability of the accounts. These factors include, but are not limited to, the length
of the Proprietor’s relationship with the clients, clients’ payment behavior and known market
factors. The Proprietor reviews the age and status of receivables, and identifies accounts that are
to be provided with allowance on a regular basis. The amount and timing of recorded expenses
for any period would differ if the Proprietor made different judgments or utilized different
estimates. An increase in allowance for impairment losses would increase the recorded
administrative expenses and decrease current assets.

b) Estimating Useful Lives of Property and Equipment

The Proprietor estimates the useful lives of property and equipment based on the period over
which the assets are expected to be available for use and on the collective assessment of industry
practice, internal technical evaluation and experience with similar assets. The EUL of property
and equipment are reviewed at least annually and are updated if expectations differ from
previous estimates due to physical wear and tear, technical or commercial obsolescence and
legal or other limits on the use of these assets. It is possible that future results of operations
could be materially affected by changes in these estimates brought about by changes in factors
mentioned above. The amounts and timing of recording of depreciation expense for any period
would be affected by changes in these factors and circumstances. There were no changes in the
EUL of property and equipment in 2019 and 2018 (see Note 7).

c) Impairment of Non-financial Assets

Alberto N. Bolo
Notes to the Financial Statements
 Section 27 of PFRS for SMEs requires non-financial assets to be tested for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The Proprietor is required to make estimates and assumptions to determine
the future cash flows to be generated from the continued use and ultimate disposition of these
assets in order to determine the value of these assets. While the Proprietor believes that the
assumption used are reasonable and appropriate, these estimates and assumptions can materially
affect the financial statements. Future adverse events may cause the Proprietor to conclude that
the affected assets are impaired and may have a material impact on the financial condition and
results of her operation.

5. Cash
Cash includes cash on hand and cash funds, to wit:

2019 2018
Cash on hand ₱ 44,438 ₱ 286,470
Petty cash fund 10,000 10,000
Total ₱ 54,438 ₱ 296,470

Petty cash fund is maintained under imprest fund system to cover small payments not covered by checks,
such as transportation, meals, office supplies, and other payments.

6. Trade Receivables
This account consists of:

2019 2018
Trade receivables ₱ 224,483 ₱ 498,850
Total ₱ 224,483 ₱ 498,850

Trade receivables consist of accounts collectible from customers within 12 months and are non-interest
bearing. The Proprietor did not provide for any allowance for doubtful accounts since all receivables are
still currently collectible. Also, there are no receivables pledged as a security for liabilities.

Alberto N. Bolo
Notes to the Financial Statements
7. Property & Equipment
The roll-forward analyses of this account are as follows:

Construction Small & Tools

A. Equipment Equipment Sub-total
Cost:
As at December 31, 2017 ₱ – ₱ 475,000 ₱ 475,000
Additions 2,000,000 25,000 2,025,000
As at December 31, 2018 ₱ 2,000,000 ₱ 500,000 ₱ 2,500,000
Additions – – –
As at December 31, 2019 ₱ 2,000,000 ₱ 500,000 ₱ 2,500,000

Accumulated depreciation & impairment:

As at December 31, 2017 ₱ – ₱ –0 ₱ –
Depreciation – 5,000 5,000
As at December 31, 2018 ₱ –90500 ₱ 5,000 ₱ 5,000
Depreciation 400,000 100,000 500,000
As at December 31, 2019 ₱ –90500 ₱ 105,000 ₱ 505,000

Carrying amount:
As at December 31, 2018 ₱ 2,000,000 ₱ 495,000 ₱ 2,495,000
As at December 31, 2019 ₱ 1,600,000 ₱ 395,000 ₱ 1,995,000

Service Store Total

B. Vehicle Equipment (A + B)
Cost:
As at December 31, 2017 ₱ – ₱ – ₱ 475,000
Additions 450,000 90,500 2,565,500
As at December 31, 2018 ₱ – ₱ 90,500 ₱ 12,429,269
Additions – – 864,712
As at December 31, 2019 ₱ 450,000 ₱ 90,500 ₱ 13,293,981
Accumulated depreciation & impairment:
As at December 31, 2017 ₱ ₱ 0 ₱ –
–
Depreciation – 90,500 90,500
As at December 31, 2018 ₱ – ₱ 90,500 ₱ 90,500
Depreciation 45,000 – 545,000
As at December 31, 2019 ₱ 45,000 ₱ 90,500 ₱ 640,500
Carrying amount:
As at December 31, 2018 ₱ 450,000 ₱ – ₱ 2,945,000
As at December 31, 2019 ₱ 405,000 ₱ – ₱ 2,400,000

As at December 31, 2019 and 2018, there is no indication of any impairment loss on the carrying value of
property & equipment since its recoverable amount exceeds its carrying amount. There were no temporary
idle property & equipment.

None of the property and equipment were pledged as security for liabilities.

8. Trade & Other Payables

This account consists of:

2019 2018
Trade payables ₱ 68,850 ₱ 48,350
Other payables 25,000 32,500
Total ₱ 93,850 ₱ 80,850

Trade & other payables are unsecured and non-interest bearing obligations to suppliers and other third
parties normally payable within 12 months. Other payables are short-term, unsecured and non-interest
bearing payables to other parties.
Alberto N. Bolo
Notes to the Financial Statements
9. Revenues
Revenues are derived from sale of services (construction of building), to wit:

2019 2018
Sale of services ₱ – ₱ 5,596,872
Total ₱ – ₱ 5,596,872

10. Cost of Service

The details of cost of service are shown below:

Note 2019 2018

Unused materials and supplies, beginning 7 ₱ 105,380 ₱ –
Materials and supplies purchased 55,700 1,138,225
Materials and Supplies available for use ₱ 161,080 ₱ 1,138,225
Less: Unused materials and supplies, (161,080) (105,380)
ending 7
Materials and Supplies used ₱ – ₱ 1,045,500
Direct labor 12 258,211 1,032,845
Total prime cost ₱ 258,211 ₱ 2,078,345
Manufacturing overhead:
Factory supplies 1,300 5,200
Power, light & water 3,975 15,900
Statutory Contributions 12 2,328 9,310
Total manufacturing cost ₱ 265,814 ₱ 2,108,755
Cost of service ₱ 265,814 ₱ 2,108,755

11. General & Administrative Costs

The following are the breakdown of general & administrative costs:

Note/s 2019 2018

Salaries & employee benefits 12 ₱ 99,170 ₱ 495,850
Taxes & licenses 15 33,470 28,394
Gas & Oil 16,992 84,962
Power, light & water 8,657 43,286
Insurance expense 2,490 12,450
Legal and audit fees 3,000 15,000
Transportation 5,891 29,456
Office supplies 8,427 42,135
Statutory contributions 9,507 49,585
Repairs & maintenance 6,254 31,269
Telecommunication 4,950 –
Depreciation 7 545,000 95,500
Miscellaneous 9,076 45,380
Total ₱ 752,885 ₱ 973,267
12. Employee Benefits

Short-term Employee Benefits

The amount of short-term employee benefits are broken down as follows:

Alberto N. Bolo
Notes to the Financial Statements
 2019 2018
Salaries & wages ₱ 357,381 ₱ 1,528,695
Statutory contributions 11,835 58,895
Total ₱ 369,216 ₱ 1,587,590

The amount of salaries, employee benefits is allocated as follows:

Note/s 2019 2018

Cost of service 10 ₱ 260,539 ₱ 1,042,155
General & administrative costs 11 108,677 545,435
Total ₱ 369,216 ₱ 1,587,590

The Proprietor does not provide any post-employment benefit plans to her employees.

13. Income tax

The computation of tax expense as reported in the statements of comprehensive income:

2019 2018
Current tax expense:
Final tax at 20% ₱ – ₱ –
Regular income tax at graduated rates – 654,752
Income tax expense ₱ – ₱ 654,752

The computation of current tax payable are as follows:

Note/s 2019 2018

Profit subject to income tax ₱ ₱
(1,018,699) 2,514,850
Current tax payable ₱ – ₱ 654,752

Effective July 6, 2008, Republic Act No. 9504 was approved giving taxpayers an option to claim itemized
deductions or optional standard deductions (OSD) equivalent to 40% of gross sales. For 2019 and 2018 the
Proprietor opted to claim itemized deductions.

Republic Act (RA) No. 10963, or the Tax Reform Act for Acceleration and Inclusion (TRAIN) enacted
December 19, 2017 provides a revised income tax rates for individuals. From January 1, 2018 to December
31, 2022, the income tax rates for individual taxpayers will be replaced with 0 percent-35 percent
progressive tax rates, from the previous 5 percent-32 percent graduated tax rates. Also, the personal
exemption of P50,000 and additional exemption of P25,000 per dependent, which were enjoyed by
taxpayers in the old tax system, have now been removed.

14. Events After the End of the Reporting Period

There were no events that require adjustments or disclosures between the date of statement of financial
position and the date of issuance of the audited financial statements.

15. Supplementary Information Required by the BIR

Revenue Regulation 15-2010
In accordance with Revenue Regulations No. 15-2010 of the Bureau of Internal Revenue (BIR), the
following are the information on taxes, duties and license fees paid or accrued which is presented for
purpose of filing with the BIR and is not a required part of the basic financial statements.

Output Taxes
Alberto N. Bolo
Notes to the Financial Statements
 Tax Base Output Taxes
2019 2018 2019 2018
VAT sales/receipts – private ₱ – ₱ 5,596,872 ₱ – ₱ 671,625
Total ₱ – ₱ 5,596,872 ₱ – ₱ 671,625

The Proprietor does not have any sales or receipts from the government, or any sales or receipts which are
exempt from VAT or subject to 0% VAT (zero-rated).

Input Taxes

2019 2018
Capital goods not subject to amortization ₱ – ₱ –
Goods for resale/manufacture or further processing – –
Goods other than for resale or manufacture – 467,350
Services lodged under cost of goods sold – –
Services lodged under other accounts – 175,200
Balance at the end of the year ₱ – ₱ 642,550

Taxes, Licenses & Registration Fees

Note/s 2019 2018

National Taxes:
BIR annual registration fee ₱ 500 ₱ 500
Local Taxes:
Mayor's permit & business licenses 27,965 ₱ 21,389
Community tax certificate 5,005 5,005
Other local taxes – 1,500
Total 15 ₱ 33,470 ₱ 28,394

Revenue Regulations No. 34–2020

Revenue Regulations No. 34–2020 issued by the BIR on December 21, 2020 prescribed the guidelines and
procedures for the submission of BIR Form 1709, transfer pricing documentation and other supporting
documents, amending the purpose of RR Nos. 19-2020 and 21-2002, as amended by RR No. 15-2010.

As of the reporting date, the Company did not meet any of the criteria and thresholds stipulated by the
regulation. Thus, the Company is not required to submit the aforementioned BIR form and documents.

Alberto N. Bolo
Notes to the Financial Statements