LINE ITEM INITIAL MEASUREMENT SUBSEQUENT MEASUREMENT

ASSETS:
1. CASH Face Amount Face Amount
a) Coins and currencies - Face amount is a financial team that refers to the - Face Amount is a financial team that refers to the
b) Demand deposits stated value or a security at the time of issuance. stated value or a security at the time of issuance.
 Checking account It is also known as the “nominal value.” It is also known as the “nominal value.”
 Savings
c) Bank drafts *Cash denominated in foreign currency is translated at *Cash denominated in foreign currency is translated at
d) Money orders the current exchange rate at the reporting date. the current exchange rate at the reporting date.
e) Checks - The price of a country’s money in relation to - The price of a country’s money in relation to
f) Cash fund for current operations another country’s money. another country’s money.
 Petty cash fund - The ratio at which two currencies are traded. - The ratio at which two currencies are traded.
 Revolving fund
 Payroll fund **Cash in bank undergoing bankruptcy is measured at **Cash in bank undergoing bankruptcy is measured at
 Change fund realizable value. realizable value.
 Dividend fun - The net consideration from sales proceeds of any - The net consideration from sales proceeds of any
 Tax fund assets in the normal course of business after the assets in the normal course of business after the
 Travel fund deduction of incidental expenses such as deduction of incidental expenses such as
 Interest fund completion charges, brokerage, commissions, etc. completion charges, brokerage, commissions, etc.
 Other type of imprest bank account used
in current operations
g) Postdated checks drawn
h) Unrestricted checks drawn
i) Stale checks
2. CASH EQUIVALENTS Face Amount Face Amount
a) Treasury bills - Face amount is a financial team that refers to the - Face amount is a financial team that refers to the
b) Bonds acquired 3 months before maturity stated valve or a security at the time of issuance. It stated valve or a security at the time of issuance. It
date is also known as the “nominal value.” is also known as the “nominal value.”
c) Money market investments (3 months before
maturity) *Cash denominated in foreign currency is translated at *Cash denominated in foreign currency is translated at
d) Commercial paper (3 months before the current exchange rate at the reporting date. the current exchange rate at the reporting date.
maturity) - The price of a country’s money in relation to - The price of a country’s money in relation to
e) 3-month time deposits another country’s money. another country’s money.
f) Redeemable preference shares acquired 3 - The ratio at which two currencies are traded. - The ratio at which two currencies are traded.
months or less before redemption
g) Sinking Fund (currently only if bonds are due **Cash in bank undergoing bankruptcy is measured at **Cash in bank undergoing bankruptcy is measured at
next year) realizable value. realizable value.
- The net consideration from sales proceeds of any - The net consideration from sales proceeds of any

3. TRADE AND OTHER RECEIVABLES
a) Accounts receivable
b) Notes receivable
c) Loans receivable
d) Advances to officers and employees,
suppliers, and affiliates
e) Accrued income
f) Deposits paid to cover potential damages or
losses, guarantee of performances or
payment, and returnable items
g) Claims receivable from:
 Insurance companies for casualties
sustained
 Defendants under suit
 Government agencies for refundable
taxes and other remittances
 Common carriers for damaged or lost
goods
 Suppliers for returned or damaged goods
4. FINANCIAL ASSETS (Other than Cash and Cash
Equivalents, Trade and Other Receivables and
Investment in Associates using Equity method)
1. Equity Securities
a.) Stocks
2. Debt Securities
a.) Bonds
assets in the normal course of business after the
deduction of incidental expenses such as
completion charges, brokerage, commissions, etc.
Fair value plus transaction costs
Fair Value is the highest price an asset would sell for in
the free market based on its current market valve.
Transaction Costs are incremental costs that are
directly attributable to the acquisition, issue or
disposal of a financial asset or liability.
*Receivables denominated in foreign currency is
initially translated at exchange rate at the date of
transition.
- The price of a country’s money in relation to
another country’s money.
- The ratio at which two currencies are traded.
Fair Value plus Transaction Cost
Fair value is the price that would be received to sell an
asset in an orderly transaction between market
participants at the measurement date.
Transaction Cost is an incremental cost that is directly
attributable to the acquisition, issuance or disposal of
financial asset or liability.
- Transaction cost in Financial asset measured at
Fair value through profit and loss is EXPENSED
because, all the changes whether realized or
unrealized, temporary or permanent, it is going in
the Profit and Loss, therefore, the transaction cost
which is not the actual investment but merely a
directly attributable cost, shall not be capitalized
assets in the normal course of business after the
deduction of incidental expenses such as
completion charges, brokerage, commissions, etc.
Recoverable historical costs (or net realizable value)
NRV represents the amount of cash expected to be
recovered from the contractual cash flow off the
receivable
*Receivables denominated in foreign currency is
subsequently translated at the exchange rate at the
end of the reporting period.
- The price of a country’s money in relation to
another country’s money.
- The ratio at which two currencies are traded.
Classification of Financial Asset is based on Business
model.
1. To hold Investments in order to realize Fair Value
changes (FVPL).
We choose Fair value through Profit and Loss
measurement if:
a) Held for trading (To take advantage on the
fluctuations of Fair Value.)
*applicable to Equity and Debt Instruments
b) All other investment in quoted Equity
Securities.
*applicable only to Equity Securities.
c) Irrevocably designated on initial recognition
but treated as an outright expense. *only available for Debt Securities because
there is no contractual cash flows in Equity
Securities.
d) All debt instruments that do not satisfy the
requirements for measurements at amortized
cost and other comprehensive income.
*applicable only for debt securities.

2. To hold Investments in order to collect contractual

cash flows and selling the investment. (FVOCI)
a) Equity Securities
Provided not held for trading an entity can
make irrevocable election to FVOCI on initial
recognition.
b) Debt Securities
FVOCI if BOTH condition are met:
1. The business model is achieved by
collecting contractual cash flow and by
selling the financial asset.
2. The contractual cash flows are solely for
payments of principal and interest on the
principal outstanding (SPPI test).
3. To hold Investments in order to collect contractual
cash flow. (Amortized cost).
* This measurements is only applicable for Debt
Securities.

Financial asset is measured at amortized cost if these

to are met:
1. The business model is to hold the financial asset in
order to collect contractual cash flow on specified
date.
2. The contractual cash flow are solely payments of
principal and interest on the principal outstanding.
(SPPI test).

*Classic example is Bonds BUT not in all case,

because it is always base on the business model.
5. INVENTORIES
6. Prepaid expenses
7. NOTES RECEIVABLE (Trade or Nontrade)
a) Interest bearing
b) Noninterest bearing
 Loans from employees and affiliates
 Sale of PPE on credit
Lower of Cost and net realizable value
Cost is the amount of cash or cash equivalents paid or
the Fair value of the other consideration given to
acquire an asset at the time of its acquisition or
construction.
NRV represents the amount of cash expected to be
recovered from the contractual cash flow off the
receivable.
Face value
- Face value is a financial term that refers to that
stated value of a security at the time of issuance,
also known as the "nominal value”.
Fair value plus transaction costs
Fair Value is the highest price an asset would sell for in
the free market based on its current market valve.
Transaction Costs are incremental costs that are
directly attributable to the acquisition, issue or
disposal of a financial asset or liability.
*When the cash price equivalent of the noncash asset
given up in exchange for the receivable is
determinable, the fair value is equal to the cash price
equivalent, EXCEPT when the practical expedient
allowed by PFRS15 is applicable.
Lower of Cost and net realizable value
Cost is the amount of cash or cash equivalents paid or
the Fair value of the other consideration given to
acquire an asset at the time of its acquisition or
construction.
NRV represents the amount of cash expected to be
recovered from the contractual cash flow off the
receivable.
Face value
- Face value is a financial term that refers to that
stated value of a security at the time of issuance,
also known as the "nominal value”.
*Subsequently treated as expense over the passage
of time
- Expense is the money spent or costs incurred by a
business in their effort to generate revenues.
Receivables initially measured at face amount are
subsequently measured at recoverable historical costs
(or net realizable value)
- NRV represents the amount of cash expected to be
recovered from the contractual cash flow off the
receivable.
Receivables initially measured at present value are
subsequently measured at amortized cost.
- Amortized cost is the amount at which the
financial asset or financial liability is measure at
initial recognition minus principal repayments,
plus or minus the cumulative amortization using
effective interest method of any difference
between the initial amount and the maturity
amount and, for financial assets adjusted for any
loss allowance.

8. SHORT-TERM RECEIVABLES
9. LONG-TERM RECEIVABLES
a) Bears reasonable interest rates
b) Bears unreasonable interest rates
c) Noninterest bearing
Short-term receivables (trade and nontrade) are
initially measured at fair value which is equal to:
 face amount; or
 present value (when the transaction contains
a significant financing component); or
 transaction price with allowed practical
expedient (for trade receivables)
*Face amount is a financial team that refers to the
stated value or a security at the time of issuance. It is
also known as the “nominal value.”
**Present value is the current value of a future sum of
money or a stream of cash flows given a specified rate
of return.
*** Transaction costs (price) are incremental costs
that are directly attributable to the acquisition, issue
or disposal of a financial asset or liability.
****
a) Fair value (equal to face value) plus transaction
cost
b) Fair value (equal to the present value of future
cash flows from the receivable) plus transaction
cost
c) Fair value (equal to the present value of future
cash flows from the receivable) plus transaction
cost
*If the initial measurement is cash price equivalent of
the noncash asset given up, subsequent measurement
is amortized cost.
**Short-term receivables (trade and non-trade) are
subsequently measured IF the initial measurement is:
 face amount, use recoverable historical cost.
 present value, use amortized cost.
 transaction price with allowed practical
expedient, use the principles of PFRS15.
*Recoverable historical cost represents the amount of
cash expected to be recovered from the contractual
cash flow off the receivable.
**Amortized cost is the amount at which the financial
asset or financial liability is measure at initial
recognition minus principal repayments, plus or minus
the cumulative amortization using effective interest
method of any difference between the initial amount
and the maturity amount and, for financial assets
adjusted for any loss allowance.
***The core principal of PFRS15 is that an entity will
recognize revenue to depict the transfer of promised
goods or services to customers in an amount that
reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services.
a) Recoverable historical cost
- It represents the amount of cash expected to be
recovered from the contractual cash flow off the
receivable
b) Amortized cost
c) Amortized cost
- It is the amount at which the financial asset or
financial liability is measure at initial recognition
minus principal repayments, plus or minus the
cumulative amortization using effective interest
 *Present Value is the current value of a future sum of method of any difference between the initial
money or stream of cash flows given a specified rate amount and the maturity amount and, for
of return. financial assets adjusted for any loss allowance.

10. Finance Lease Receivable Net Investment Amortized Cost

Net Investment in the lease is “the gross investment - Amortized cost is the amount at which the
in the lease discounted at the interest rate implicit in financial asset or financial liability is measure at
the lease.” initial recognition minus principal repayments,
plus or minus the cumulative amortization using
effective interest method of any difference
between the initial amount and the maturity
amount and, for financial assets adjusted for any
loss allowance.
11. Advance Payment Equal to the cash payment made for business Equal to the cash payment made for business
Ex. Adv. To suppliers, To customers expenses expenses
12. PPE An item of PPE is initially measured at cost. An entity chooses either the (a) cost model or the (b)
a. Land - Cost is "the amount of cash or cash equivalents revaluation model as its accounting policy and applies
b. Land and bldg paid or the fair value of the other consideration that policy to an entire class of PPE
c. Machinery given to acquire an asset at the time of its
d. Ships acquisition or construction or, where applicable, Under COST MODEL, PPE is carried at its cost less any
e. Aircrafts the amount attributed to that asset when initially accumulated depreciation and any accumulated
f. Motor vehicle recognized in accordance with the specific impairment loss.
g. Furniture and fixture requirements of other PFRSs.
h. Office equipment Under REVALUATION MODEL, a PPE is subsequently
i. Bearer plants Acquisition through: measured at a revalued amount, being its fair value at
1. Purchase the date of the revaluation less any subsequent
a) Purchase Price accumulated depreciation and accumulated
b) Direct cost impairment losses.
c) PV of decommissioning and restoration Fair value is “the price that would be received to sell
2. Self construction an asset or paid to transfer a liability in an orderly
Direct materials, direct labor, and construction transaction between market participants at the
overhead measurement date.”
3. Exchange
a) Fair value of asset given up
b) Fair value of asset received
c) Carrying amount of asset given up
4. Issuance of equity or debt instrument
 a) Fair value of asset received
b) Fair value of equity or debt instrument issued
5. Donation
a) Fair value of asset received

6. Exploration and Evaluation assets Cost Cost model or Revaluation model

Cost is “the amount of cash or cash equivalents paid or
the fair value of the other consideration given to
acquire an asset at the time of its acquisition or
construction or, where applicable, the amount
attributed to that asset when initially recognized in
accordance with the specific requirements of other
PFRSs.

a. Acquisition of rights to explore

b. Topographical, geological, geochemical and
geophysical impairment studies
c. Exploratory drilling
d. Trenching
e. Sampling
f. Activities in relation to evaluating the technical
feasibility and commercial viability of extracting a
mineral resource.

*The initial measurement also includes the PV of any

decommissioning and restoration cost for which the
entity has the obligation as a consequence of having
undertaken the exploration and evaluation activities.

7. Intangible assets Cost (in general) Cost model or Revaluation model

Cost is “the amount of cash or cash equivalents paid or
the fair value of the other consideration given to
acquire an asset at the time of its acquisition or
construction or, where applicable, the amount
attributed to that asset when initially recognized in
accordance with the specific requirements of other
PFRSs.
Under COST MODEL, intangible asset is carried at its
cost less any accumulated depreciation and any
accumulated impairment loss.
Under REVALUATION MODEL, intangible asset is
subsequently measured at a revalued amount, being
 its fair value at the date of the revaluation less any
Modes of Acquisition: subsequent accumulated depreciation and
a) Separate acquisition – purchase cost plus accumulated impairment losses.
direct costs
b) Business combination – fair value at the
acquisition date
c) Government grant – fair value or nominal
amount
d) Exchange – in order of priority:
 Fair value of asset given up
 Fair value of asset received
 Carrying amount of asset given up
*If the exchange lacks commercial substance,
the intangible asset is measured using C.
e) Internal generation
 Research – expensed (except when
incurred in a business combination)
 Development – expensed; capitalized
only if all the conditions are met

8. Investment in Associates Initially measured using Equity method, initially Subsequently adjusted for the investors share in the
recognized as cost. investee’s changes in equity (profit or loss, dividends
and other comprehensive income)

9. Investment property
Cost (in general)
Cost is “the amount of cash or cash equivalents paid or
the fair value of the other consideration given to
acquire an asset at the time of its acquisition or
construction or, where applicable, the amount
attributed to that asset when initially recognized in
accordance with the specific requirements of other
PFRSs.
Modes of Acquisition:
a) Purchase – purchase price and directly
attributable costs
*if payment is deferred, the cost is the cash
price equivalent
Cost model or Fair value model
Cost model is a method or framework for determining
the total value invested to deliver a product or service.
Under this model, the investment property is
measured using cost model under PAS16 (PPE).
Fair value model is the practice of measuring your
business’s liabilities and assets at their current market
value. Under this model, the investment property is
measured at its fair value at the end of each reporting
period.
- Fair value is the amount that an asset could be
sold for (or that a liability could be settled for)
 b) Self-constructed – cost at the date when the that’s fair to both buyer and seller.
construction or development is completed.
c) Exchange of assets
 Fair value of asset given up (plus cash
paid or minus cash received
 Fair value of asset received
 Carrying amount of asset given up (plus
cash paid of minus cash received)
*If the exchange lacks commercial substance,
the intangible asset is measured at the
carrying amount of asset given up (plus cash
paid of minus cash received)
10. Biological assets Fair value less cost to sell Fair value less cost to sell

Fair value is the amount that an asset could be sold Fair value is the amount that an asset could be sold
for (or that a liability could be settled for) that’s fair to for (or that a liability could be settled for) that’s fair to
both buyer and seller. both buyer and seller.

Cost to sell is the incremental cost directly attributable Cost to sell is the incremental cost directly attributable
to the disposal of an asset, excluding finance cost and to the disposal of an asset, excluding finance cost and
income taxes income taxes
11. Current tax asset Measured at the tax rates that are expected to apply N/A
in the period in which the asset is realized and the
liability is settled based on the tax rates that have
been enacted or substantively enacted by the end of
the reporting period.

*Tax Rate is the level at which a government Imposes

taxes, generally expressed as a percentage of the valve
of what’s being taxed.

12. Deferred tax asset Measured at the tax rates that are expected to apply N/A
in the period in which the asset is realized and the
liability is settled based on the tax rates that have
been enacted or substantively enacted by the end of
the reporting period.
 *Tax Rate is the level at which a government Imposes
taxes, generally expressed as a percentage of the valve
of what’s being taxed.

13. Right of use asset The right-of-use asset is initially measured at cost. The
cost comprises the following:
a. The amount of the initial measurement of the lease
liability;
b. Any lease payments made at or before the
commencement date, less any lease incentives
received;
c. Any initial direct costs incurred by the lessee; and
d. The present value of any decommissioning and
restoration costs for which the entity has incurred an
obligation, unless those costs are incurred to produce
inventories.
14. Government grants If grants are MONETARY,
a) Amount of cash received; or
b) Fair value of the amount receivable
If grants are NONMONETARY,
a) Fair value of the nonmonetary asset
receivable; or
b) Alternatively, at nominal amount
*Fair value is “the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date.”
** Recognized if there is a reasonable assurance that
the attached conditions will be complied with AND the
grant will be received.
15. Goodwill Residual Approach
- This method involves using the relative stand
alone selling price when observable for certain of
performance of obligation.
The right-of-use asset is subsequently measured
similar to a purchased asset. Accordingly, the asset is
subsequently measured under the cost model, except
when:
a. It relates to a class of PPE that is measured under
the revaluation model, in which case, the asset may be
measured under the revaluation model.
b. It meets the definition of an investment property
and the entity uses the fair value model, in which case,
the asset is measured under the fair value model.
Capital approach or Income approach
Under CAPITAL APPROACH, grants are recognized
outside the profit or loss in equity. This approach is
used only for donations received from shareholders.
Under INCOME APPROACH, grants are recognized in
profit or loss over one or more periods. PAS20 uses
this approach.
Impairment loss
- Impairment loss is recognized whenever the
revocable amount is lower than carrying amount.

Direct Approach

16. Allowance for doubtful accounts
17. Accumulated Depreciation
- Under this, goodwill on the basis of the future
earnings of the entity.
It is represented in the balance sheet as a contra- N/A
asset account and in shown as a reduction on the
asset ride to represent a deduction of the total
accounts receivable of the business.
Straight-line Method (cost minus residual value N/A
divided by useful life in years.)
It includes other methods such as composite method,
Grove method, service-hours output method, sum-of-
the-years method, declining balance method,
inventory method, retirement method, and
replacement method.