SWEET SURPRISE VARIETY STORE

Purok 7 Unit 2 Gatchalian Building, Public Market

National Hi-way, Andres Bonifacio Diffun Quirino

STATEMENTS OF FINANCIAL POSITION

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 2021 2020

ASSETS

Current assets
Cash and cash equivalents 5 P 523,958 P 436,570
Project receivables 6 250,009 142,388
Inventories 7 450,662 435,579
Total current assets 1,224,629 1,014,537

Noncurrent assets
Property and equipment, net 8 55,432 42,906
Intangible asset, net 9 10,083 13,683
Other noncurrent assets 10 80,379 44,199
Total noncurrent assets 145,894 100,788

Total assets P 1,370,523 P 1,115,325

LIABILITY AND FUND BALANCE

Current liability
Accruals and government liabilities 11 P317,491 P236,205

Fund balance 1,053,032 879,120

Total liability and fund balance P 1,370,523 P 1,115,325

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 SWEET SURPRISE VARIETY STORE
Purok 7 Unit 2 Gatchalian Building, Public Market
National Hi-way, Andres Bonifacio Diffun Quirino

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Note 2021 2020

Income 12 P 900,520 P 900,020

Expenses
Project expenses 15 84,195 83,263
Administrative expenses 16 10,500 10,450
94,695 93,713

Excess of income over expenses P 805,825 P 806,307

(The notes on pages 5 to 22 are integral parts of these financial statements.)

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 SWEET SURPRISE VARIETY STORE
Purok 7 Unit 2 Gatchalian Building, Public Market
National Hi-way, Andres Bonifacio Diffun Quirino

STATEMENTS OF CHANGES IN MEMBERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Cumulative excess
Members' of receipts over Total fund
contributions expenses balance

Balance, December 31, 2019 P200,000 P 100,838 P 200,838

Excess of income over expenses - 198,282 198,282

Balance, December 31, 2020 200,000 199,120 399,120

Excess of income over expenses - 111,912 3,111,912

Balance, December 31, 2021 P200,000 P311,032 P,511,032

(The notes on pages 5 to 22 are integral parts of these financial statements.)

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 SWEET SURPRISE VARIETY STORE
Purok 7 Unit 2 Gatchalian Building, Public Market
National Hi-way, Andres Bonifacio Diffun Quirino

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Notes 2021 2020

Cash flows from operating activities

Excess of income over expenses P111,912 P112,631
Adjustments:
Depreciation 808,622 800,832
Amortization 8,600 8,600
Gain on sale of property and equipment - (2,000)
Finance income 617 64,926
Operating income before working capital changes 929,751 984,989
(Increase) decrease in:
Project receivables 454,379 362,738

Inventories (260,083) (283,720)

Noncurrent assets (37,426)
Decrease (increase) in:
Other payables
Cash (used in) from operating activities 1,124,047 1,026,581

Cash flows from investing activities

Acquisition of property and equipment (105,021) (107,555)
Proceeds from sale of property and equipment - 2,000
Finance income received (617) (926)
Cash used in investing activities (106,292) (110,481)

Net decrease in cash and cash equivalents (1,230,339) (1,137,062)

Cash and cash equivalents, January 1 329,381 230,803

Cash and cash equivalents, December 31 P 900,958 P 906,259

(The notes on pages 5 to 22 are integral parts of these financial statements.)

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

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

Statement of compliance
The accompanying financial statements of the Foundation have been prepared in compliance with
Philippine Financial Reporting Standards for Small and Medium-sized Entities (PFRSs for SMEs) issued by
the International Accounting Standards Board (IASB) as approved by the Financial Reporting Standards
Council (FRSC) and adopted by SEC.

Basis of measurement
The Foundation’s financial statements have been prepared under the historical cost convention.

Functional and presentation currency

The Foundation’s financial statements are presented in Philippine Peso (P), which is also the Foundation’s
functional and presentation currency, and all values are rounded off to the nearest peso, unless otherwise
indicated.

Use of judgments and estimates

The preparation of financial statements in compliance with PFRS for SMEs requires certain critical
accounting estimates. It also requires the management to exercise judgment in applying the Foundation’s
accounting policies. The areas where significant judgments and estimates have been made in preparing
the financial statements and their effects are discussed in Note 3.

Changes in accounting policies disclosures

New amendments to existing standards issued and effective starting January 1, 2017

Amendments to existing standards issued and become effective at the start of the current reporting period
are listed below. The listing is of amendments issued which the Foundation applied. These amendments
are considered to have impact on the Foundation’s financial statements.

• Section 2, Concepts and Pervasive Principles. Addition of clarifying guidance on the undue cost or
effort exemption that is used in several sections of the PFRS for SMEs – based on Q&A 2012/01
Application of ‘undue cost or effort’ – as well as a new requirement within relevant sections for
entities to disclose their reasoning of using such exemption.

• Section 4, Statement of Financial Position. 1) Addition of a requirement to present investment

property measured at cost less accumulated depreciation and impairment separately on the face of
the statement of financial position; 2) Removal of the requirement to disclose comparative
information for the reconciliation of the opening and closing number of shares outstanding.

• Section 5, Statement of Comprehensive Income and Income Statement. 1) Clarification that the single
amount presented for discontinued operations includes any impairment of the discontinued operation
measured in accordance with Section 27; 2) Addition of a requirement that entities shall group items
presented in other comprehensive income on the basis of whether they are potentially re-classifiable
to profit or loss – based on Presentation of Other Comprehensive Income (amendments to Philippine
Accounting Standards (PAS) 1) issued in June 2011.

• Section 6, Statement of Changes in Equity and Statement of Income and Retained Earnings.
Clarification of the information to be presented in the statement of changes in equity – based on
Improvements to PFRSs issued in May 2010.

• Section 11, Basic Financial Instruments. 1) Addition of undue cost or effort exemption from the
measurement of investments in equity instruments at fair value ; 2) Clarification of the interaction of
the scope of Section 11 with other sections of PFRS for SMEs; 3) Clarification of the application of the
criteria for basic financial instruments to simple loan arrangements; 4) Clarification of when an
arrangement would constitute a financing transaction; 5) Clarification in the guidance on fair value
measurement in Section 11 of when the best evidence of fair value may be a price in a binding sale
agreement.

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• Section 12, Other Financial Instruments Issues. 1) Clarification of the interaction of the scope of
Section 12 with other sections of the PFRS for SMEs; 2) Clarification of the requirements for hedge
accounting, including the addition of a sentence that clarifies the exchange differences relating to a
net investment in foreign operation for consistency with paragraphs 9.18 and 30.13.

• Section 17, Property, Plant and Equipment. 1) Alignment of the wording with the amendments to PAS
16 Property, Plant and Equipment from Annual Improvements to PFRSs 2009-2011 Cycle, issued in
May 2012, regarding the classification of spare parts, stand-by equipment and servicing equipment as
property, plant and equipment or inventory; 2) Addition of exemption in paragraph 70 of PAS 16
allowing an entity to use the cost of the replacement part as an indication of what the cost of the
replaced part was at the time that it was acquired or constructed, if it is not practicable to determine
the carrying amount of a part of an item of property, plant and equipment that has been replaced;
3) Addition of an option to use the revaluation model.

• Section 18, Intangible Assets other than Goodwill. Modification to require that if the useful life of
goodwill or another intangible asset cannot be established reliably, the useful life shall be based on
management’s best estimate but shall not exceed ten years.

• Section 20, Leases. 1) Modification to include leases with an interest rate variation clause that is
linked to market interest rates within the scope of Section 20 instead of Section 12; 2) Clarification
that only some outsourcing arrangements, telecommunication contracts that provide rights tocapacity
and take-or-pay contracts are, in substance, leases.

• Section 27, Impairment of Assets. Clarification that Section 27 does not apply to assets arising from
construction contracts.

• Section 28, Employee Benefits. 1) Clarification of the application of the accounting requirements in
paragraph 28.23 to other long-term employee benefits; 2) Removal of the requirement to disclose the
accounting policy for termination benefits.

• Section 29, Income Tax. 1) Alignment of the main principles of Section 29 with PAS 12 Income Taxes
for the recognition and measurement of deferred income tax, but modified to be consistent with the
other requirements in the PFRS for SMEs; 2) Addition of an undue cost or effort exemption to the
requirement to offset income tax assets and liabilities.

• Section 30, Foreign Currency Translation. Clarification that financial instruments that derive their
value from the change in a specified exchange rate are excluded from Section 30, but not financial
instruments denominated in foreign currency.

• Glossary (new definitions). In addition to new definitions being added to the glossary as a result of
the other amendments, the following new definitions have been added: a) active market; b) close
members of the family of a person; c) foreign operation; d) minimum lease payments; and e)
transaction costs.

Current versus noncurrent classification

The Foundation presents assets and liabilities in the statement of financial position based on
current/noncurrent classification.

An asset is current when it is:

• Expected to be realized or consumed in normal operating cycle;

• Expected to be realized within 12 months after the end of the reporting period; or
• Cash on hand and in banks unless restricted from being exchanged or used to settle a liability for
at least 12 months after the end of the reporting period.

All other assets are classified as noncurrent if they do not fall on the conditions above.

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A liability is current when it is:

• Expected to be settled in normal operating cycle;

• Due to be settled within 12 months after the end of the reporting period; or
• There is no unconditional right to defer the settlement of the liability for at least 12 months after
the end of the reporting period.

The Foundation classifies all other liabilities as noncurrent if it does not fall on the conditions above.

2.2 Basic financial instruments

Initial recognition and measurement

A financial instrument is recognized when the Foundation becomes a party to the contract. Initially, a
financial instrument is measured at the transaction price including transaction costs except financial
assets and liabilities that are measured at fair value where transaction costs are recognized in profit and
loss.

Subsequent measurement
At financial statement date, the Foundation measures its financial instruments as follows:
Debt instruments are measured at amortized costs using the effective interest method.
Short-term debt instruments are measured at undiscounted amount.
Equity instruments that are publicly traded are measured at fair value with changes in fair value
recognized in statement of operations.
Equity instruments that are not traded are measured at cost less accumulated impairment.

Derecognition
The Foundation derecognizes a financial asset when the contractual right to the cash flows from the
financial asset has expired or when the Foundation has transferred to another party substantially all of
the risks and rewards of ownership of the financial asset.

A financial liability is derecognized when it is extinguished. Any difference between the carrying amount
of the financial liability extinguished and the consideration paid is recognized in statement of operations.

Cash and cash equivalents

Cash and cash equivalents are measured at face value. Cash and cash equivalents include cash on hand,
demand deposits and other short-term highly liquid investments with original maturities of three months
or less. For the purpose of reporting cash flows, all cash and cash equivalents are not restricted and
available for use in current operations.

Project receivables
Project receivables are initially measured at transaction price and subsequently measured at amortized
cost less provision for impairment, if any. Impairment is considered when there is objective evidence that
the Foundation will not be able to collect the all amounts due according to the original terms of the
receivables.

The allowance for impairment loss is the estimated amount of probable losses arising from non-collection
based on past collection experience and management’s review of the current status of the long-
outstanding receivables.

Security deposit
Security deposit are initially and subsequently carried at cost. This is made in relation to the lease entered
into by the Foundation.

Accruals
Accruals are recognized initially at the transaction price and subsequently measured at amortized cost
less subsequent payments.

Accruals are liabilities to pay for goods or services that have been received or supplied but have not been
paid, invoiced or formally agreed with the supplier, including amounts if any to employees.

Details of the Company’s basic financial instruments are set forth in Note 4.

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2.3 Impairment and reversal of impairment for financial instruments measured at cost or amortized
cost

At the end of each reporting period, the Foundation shall assess whether there is objective evidence of
impairment of any financial assets that are measured at cost or amortized cost. If there is objective
evidence of impairment, the Foundation shall recognize an impairment loss in profit or loss immediately

If, in a subsequent period, the amount of an impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the Foundation shall reverse the
previously recognized impairment loss either directly or adjusting the allowance account. The reversal
shall not result in a carrying amount of the financial asset (net of allowance account) that exceeds what
the carrying amount would have been had the impairment not previously recognized. The Foundation shall
recognize the amount of reversal in profit or loss immediately.

2.4 Inventories

Inventories are stated at the lower of cost and selling price less costs to complete and sell. Cost is
determined using the moving average method. At each financial reporting date, inventories are assessed
for impairment. If the inventory is impaired, the carrying amount is reduced to its selling price less costs
to complete and sell; the impairment loss is recognized immediately in profit or loss.

2.5 Prepayments

Prepayments represent expenses not yet incurred but already paid in cash. Prepayments are initially
recorded as assets and measured at the amount of cash paid. Subsequently, these are charged to income
as they are consumed in the operation or expire with passage of time. Prepayments are classified in the
statement of financial position as current asset when the cost of goods or services related with the
prepayments is expected to be incurred within twelve (12) months after the balance sheet date.

2.6 Property and equipment, net

Items of property and equipment are initially measured at cost. Cost includes expenditures that are
directly attributable to bringing the asset to the location and condition necessary for it to be capable of
operating in the manner intended by management. Subsequently, property and equipment are carried at
cost less accumulated depreciation and any accumulated impairment losses.

The Foundation adds to the carrying amount of an item of property and equipment the cost of replacing
part of such an item when the cost incurred is expected to provide incremental future benefits to the
Foundation. The carrying amount of those parts that are replaced is derecognized. All other repairs and
maintenance are charged to profit or loss during the period in which they are incurred

Depreciation is charged so as to allocate the cost of depreciable assets over their estimated useful lives,
using the straight-line method. The estimated useful lives range as follows:

Property classification Estimated useful life

Factory equipment 5 - 10 years
Office equipment, furniture and fixtures 5 years
Leasehold improvement 20 years
Showroom equipment, furniture and fixtures 5 years
Vehicle 7 years

Leasehold improvements are amortized over the improvements’ useful life of twenty (20) years or lease
term, whichever is shorter.

If there is an indication that there has been a significant change in depreciation rate or useful life of an
asset, the depreciation of that asset is revised prospectively to reflect the new expectations.

Fully depreciated assets are retained in the accounts until they are no longer in use and no further charge
for depreciation is made with respect to those assets.

An item of property and equipment is derecognized when it is disposed of. Gains and losses on disposals
are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

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2.7 Intangible asset, net

Intangible asset is capitalized and is measured at cost less any accumulated amortization and accumulated
impairment losses, if any.

Amortization of the intangible asset is computed on a straight-line basis over the expected usage of the
asset by the Foundation which is 5 years. The carrying value of the intangible asset is reviewed for
impairment when events or changes in circumstances indicate that the carrying value may not be
recoverable.

2.8 Other noncurrent assets

Other noncurrent assets represent creditable withholding taxes and are initially and subsequently
measured as cost.

2.9 Impairment of non-financial assets

At each financial reporting date, inventories and property and equipment and intangible asset are
reviewed to determine whether there is any indication that those assets have suffered an impairment loss.
If there is an indication of possible impairment, the recoverable amount of any affected asset (or group
of related assets) is estimated and compared with its carrying amount. If estimated recoverable amount
is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is
recognized immediately in profit or loss.

Similarly, at each financial reporting date, inventories are assessed for impairment by comparing the
carrying amount of each item of inventory (or group of similar items) with its selling price less costs to
complete and sell. If an item of inventory (or group of similar items) is impaired, its carrying amount is
reduced to selling price less costs to complete and sell, and an impairment loss is recognized immediately
in profit or loss.

If an impairment loss subsequently reverses, the carrying amount of the asset (or group of related assets)
is increased to the revised estimate of its recoverable amount (selling price less costs to complete and
sell, in the case of inventories), but not in excess of the amount that would have been determined had no
impairment loss been recognized for the asset (or group of related assets) in prior years. A reversal of an
impairment loss is recognized immediately in profit or loss.

2.10 Government liabilities

Government liabilities are recognized initially at their transaction price and subsequently measured at
amortized cost less subsequent payments.

2.11 Provisions and contingencies

A provision is recognized when the Foundation has a present obligation (legal or constructive) as a result
of past event and it is probable that an outflow of resources embodying economic benefits will be requiredto
settle the obligation and a reliable estimate can be made on the amount of the obligation.

Contingent liabilities are not recognized in the financial statements. They are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not
recognized in the financial statements but disclosed in the notes to financial statements when an inflow
of economic benefits is probable.

2.12 Members’ equity

Members’ contribution
Members’ contributions represent the capital contributed by the members which form part of the
Foundation’s fund balance.

Fund balance
Fund balance represents member’s contributions and the cumulative excess of receipts over expenses of
current and prior period operations as disclosed in the statement of operations and statements of changes
in member’s equity including prior period adjustments, effect of changes in accounting policies and other
capital adjustments. When surplus account has a debit balance, it is called “deficit”, and presented as a
deduction from equity.
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2.13 Revenue recognition

Revenue is recognized to the extent that it is probable that economic benefits will flow to the Foundation
and income can be reliably measured.

The additional specific recognition criteria for each type of revenue are as follows:

Foreign and local grants

Grants are recognized at their fair value where there is reasonable assurance that the grant will be
received and all attaching conditions will be complied with. When the grant relates to an expense item,
it is recognized as income over the years necessary to match the grant on a systematic basis to the costs
that it is intended to compensate. When the grant relates to an asset, the fair value is credited to a
deferred income account and is released to the statement of operations over the expected useful life of
the relevant asset by equal annual installments.

Donations received
Cash donations are recognized as revenues when these are actually received by the Foundation while asset
donations are credited to a deferred revenue account and are released to the statement of operations
over the expected useful life of the relevant asset by equal annual installments.

Membership dues
Revenue is recognized upon actual receipt thereof.

Finance income
Revenue is recognized as the interest accrues (taking into account the effective yield on the asset).

Gain or loss on foreign exchange

Transactions in foreign currencies are recorded in Philippine peso based on the exchange rates prevailing
at the date in which the transaction took place. Foreign currency denominated assets and liabilities of the
Foundation are translated using the prevailing exchange rate as of balance sheet date. Gains or losses arising
from these transactions and translation are credited or charged to income for the year.

Service income
Revenue is recognized upon substantial performance of the services required.

2.14 Cost and expense recognition

Cost and expenses are recognized in statement of operations when decrease in future economic benefit
related to a decrease in an asset or an increase in a liability has arisen that can be measured reliably. Cost and
expenses are recognized 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 with incomecan only be
broadly or indirectly determined; or immediately when an 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 statement of financial position as an asset.

Costs and expenses are presented using the function of expense method in profit or loss. General and
administrative expenses are costs attributable to administering and overseeing the overall business and
other operating activities of the Foundation.

2.15 Employee benefit obligations

Short-term employee benefits

The Foundation recognizes a liability net of amounts already paid and an expense for services rendered
by employees during the accounting period. Short-term benefits given by the Foundation to its employees
include salaries and wages, social security contributions, short-term compensated absences, bonuses and
other non-monetary benefits.

Long-term employee benefits

The Foundation does not have a defined benefit retirement plan. The Foundation will comply with the
retirement procedures set forth in R.A. 7641 in terms of post employment benefits.

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2.16 Operating leases

Foundation as lessee
Leases which do not transfer to the Foundation substantially all the risks and benefits of ownership of the
asset are classified as operating leases. Operating lease payments are recognized as expense in the
statement of operations on a straight-line basis over the lease term. Associated costs, such asmaintenance
and insurance, are expensed as incurred.

2.17 Foreign currency - denominated transactions

Transactions in foreign currencies are recorded using the exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are restated using the closing exchange
rate ruing as at the date of the financial reporting date. All differences are taken to profit or loss except
for foreign exchange differences that qualify as capitalizable borrowing costs for qualifying assets.
Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined.

2.18 Events after the financial reporting date

Post year-end events up to the date of the auditors’ report that provide additional information about the
Foundation’s position at financial reporting date (adjusting events) are reflected in the financial
statements. Post year-end events that are not adjusting events are disclosed in the notes to the financial
statements when material.

As at and for the year ended, the Foundation has no event after the financial reporting date that requires
disclosures in the financial statements.

NOTE 3 – INFORMATION ABOUT KEY SOURCES OF ESTIMATION UNCERTAINTY AND JUDGMENTS

The Foundation makes certain estimates and assumptions regarding the future. Estimates and judgments
are continually evaluated based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.

Allowance for impairment losses on receivables

The Foundation performs a regular review of the age and status of these accounts, designed to identify
accounts with objective evidence of impairment.

Net realizable value of inventories

The Foundation reviews the net realizable value of, and demand for, its inventory on a quarterly basis to
provide assurance that recorded inventory is stated at the lower of cost or net realizable value. Factors
that could impact estimated demand and selling prices include the timing and success of future
technological innovations, competitor actions, supplier prices and economic trends.

Useful lives of property and equipment and intangible asset

Property and equipment are depreciated over their useful lives. Useful lives are based on the
management's estimates of the period that the assets will generate revenue, which are periodically
reviewed for continued appropriateness. Changes to estimates can result in significant variations in the
carrying value and amounts charged to the statement of operations in specific periods. More details
including carrying values are included in Note 8.

Asset impairment
The Foundation assesses the impairment of its assets whether events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Future events could cause management to
conclude that these assets are impaired. Any resulting impairment loss could have a material adverse
impact on the Foundation's financial condition and results of operations. While management believes that
the assumptions made are appropriate and reasonable, significant changes in assumptions may materially
affect assessment of recoverable values and may lead to future additional impairment charges. No
impairment losses were recognized the Foundation’s assets as of December 31, 2017 and 2016.

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