 is any contract that evidences a residual interest in the assets of an entity after

deducting all of its liabilities. Equity instrument

 is a financial instrument that derives its value from the movement in commodity
price, foreign exchange rate and interest rate of an underlying asset or financial
instrument. Derivative
 is any contract that gives rise to both a financial asset of one entity and a financial
liability or equity instrument of another entity. (Par. 9, PPSAS 28) Financial
instrument
 Financial asset – is any asset that is:
 Financial liability – is any liability that is:
 The following are the characteristics of a financial instrument:
 For the purpose of measuring a financial asset after initial recognition, the financial
assets are classified into four categories, namely:
 The following schedules and forms shall be prepared and maintained by the
agencies relative to their financial instruments accounts:
 The BTr shall maintain records on
_____________________________________________________________________
 is the cost the entity would incur to acquire the asset on the reporting date. Current
Replacement Cost
 is the amount for which the same inventory could be exchanged between
knowledgeable and willing buyers and sellers in the marketplace. Fair Value –
 Inventories are assets:
 is the estimated selling price in the ordinary course of operations, less the estimated
costs of completion and the estimated costs necessary to make the sale, exchange,
or distribution. It is the net amount that an entity expects to realize from the sale of
inventory in the ordinary course of operations. (Pars. 9 & 10, PPSAS 12) d. Net
Realizable Value
 is a system that continually tracks all additions to and deletions from inventory.
Perpetual Inventory System
 Inventories shall be measured as follows:
 The financial statements shall disclose:
 The sub-systems for inventory accounting are as follows:
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 shall be prepared upon issue of semiexpendable property covered by approved
RIS. Inventory Custodian Slip (ICS) (Appendix 59)
 SHALL be used by the Property and/or Supply Custodian to support the purchase of
property, supplies and materials, etc. It shall be issued to the selected supplier
indicating, among other information, the specifications, quantities, and agreed prices
 of property, supplies and materials to be purchased. Purchase Order (PO)
(Appendix 61)
 shall be used to record materials received, issued and the balance both in quantity
and amount at any time. It shall be maintained by the Accounting Division/Unit for
each kind of supplies and materials. The IAR, RIS, RSMI, PO and DR serve as the
original sources of information for making entries on the card. Supplies Ledger Card
(SLC) (Appendix 57)
 shall be used to record all receipts and issues of supplies and the balance in
quantity at any time. It shall be maintained by the Property and/or Supply
Division/Unit for each item in stock. The IAR, RIS, PO and DR serve as the original
sources of information for making entries on the card. Stock Card (SC) (Appendix
58)
 shall be used by the end-user to request for the purchase of inventory or item/s not
available on stock. It shall be the basis of preparing the PO. Purchase Request (PR)
 shall be prepared by the Property and/or Supply Custodian based on the RIS and
shall be used by the Accounting Division/Unit as basis in preparing the JEV to
record the supplies and materials issued. Report of Supplies and Materials Issued
(RSMI) (Appendix 64)
 shall be used to report the physical count of supplies by type of inventory as at a
given date. It shows the balance of inventory items per card and per count and
shortage/overage, if any. These include the semi-expendable property wherein the
issue is covered by ICS. Report on the Physical Count of Inventories (RPCI)
(Appendix 66)
 shall be used by the Property and/or Supply Custodian to report all waste materials
such as destroyed spare parts and other materials considered scrap due to
replacement. Waste Materials Report (WMR) (Appendix 65)
 shall be used for inspection and acceptance of purchased and delivered property,
supplies and materials. Inspection and Acceptance Report (IAR) (Appendix
 shall be used by the end-user to request issue of supplies and materials that are
carried on stock. It is also used by the Property and/or Supply Division/Unit to
indicate availability or non-availability of items requisitioned and/or to record issues
of item/s requisitioned. Requisition and Issue Slip (RIS) (Appendix 63)
 shall be prepared by the Accountable Officer to report on the movement and status
of accountable forms in his/her possession. The accountable forms include those
with or without face value. Report of Accountability for Accountable Forms (RAAF)
(Appendix 67)
(Appendix 60)
 is a property (land or buildings-or part of a building-or both) held to earn rentals, or
for capital appreciation or both. It is not held for use in the production or supply of
goods or services, for administrative purposes, or sale in the ordinary course of
business. f. Investment Property –
 is the amount at which an asset is presented in the statement of financial position.
Carrying amount –
 is property held (by the owner or by the lessee under a finance lease) for use in the
production or supply of goods or services or for administrative purposes. g. Owner-
occupied property –
 is the amount of cash or cash equivalents paid or the fair value of other
consideration given to acquire an asset at the time of its acquisition or construction.
c. Cost –
 is the higher of a cash-generating asset’s fair value less costs to sell and its value in
use. h. Recoverable amount –
 is the systematic allocation of the depreciable amount of an asset over its useful life.
d. Depreciation –
 a loss in the future economic benefits or service potential of an asset, over and
above the systematic recognition of the loss of the asset’s future economic benefits
or service potential through depreciation. e. Impairment –
 the smallest identifiable group of assets held with the primary objective of
generating a commercial return that generates cash inflows from continuing use that
are largely independent of the cash inflows from other assets or groups of assets.
Cash Generating Unit –

IP or NOT?
1. A building owned by the entity (or held by the entity under a finance lease) and
leased out under one or more operating leases on a commercial basis; IP
2. Land held for a currently undetermined future use; IP
3. Property held for future use as owner-occupied property; NIP
4. Property held to provide a social service and which also generates cash inflows;
NIP
5. Owner-occupied property awaiting disposal. NIP
6. A building that is vacant but is held to be leased out under one or more operating
leases on a commercial basis to external parties; IP
7. Land held for long-term capital appreciation rather than for short-term sale in the
ordinary course of operations; IP
 8. Property that is being constructed or developed for future use as IP; IP
9. Property being constructed or developed on behalf of third parties; NIP
10. Property held for use in the production or supply of goods or services or for
administrative purposes. NIP
11. Biological assets related to agricultural activity; NIP
12. Property held for sale in the ordinary course of operations or in the process
of construction or development for such sale; NIP
13. Significant portion of a property that is held to earn rentals or for capital
appreciation rather than to provide services, and insignificant portion that is held
for use in the production or supply of goods or services or for administrative
purposes. IP
14. Property held for future development and subsequent use as owner-
occupied property; NIP
15. Property occupied by employees; NIP
16. Property that is leased to another entity under a finance lease NIP
17. Property held for strategic purposes; NIP
18. Mineral rights and mineral reserves such as oil, natural gas and similar
nonregenerative resources; NIP

 is the harvested product of the entity’s biological assets. (Par. 9, PPSAS 27)
Agricultural Produce –
 is the creation of additional living animals or plants. (Par. 11, PPSAS 27) Procreation
–
 are those biological assets that are used repeatedly or continuously for more than
one year in an agricultural activity. Bearer biological assets are not agricultural
produce but, rather, are self-regenerating. Example, livestock from which milk is
produced, grape vines, fruit trees, and trees from which firewood is harvested while
the tree remains. (Par. 40, PPSAS 27) Bearer Biological Assets –
 are those that have attained harvestable specifications (for consumable biological
assets) or are able to sustain regular harvests (for bearer biological assets). (Par.
43, PPSAS 27) Mature Biological Assets –
 is an aggregation of similar living animals or plants. (Par. 9, PPSAS 27) Group of
Biological Assets –
 are those that are held for harvest as agricultural produce or for sale or distribution
at no charge or for a nominal charge as biological assets. Examples of consumable
biological assets are animals and plants for one-time use such as livestock intended
for the production of meat, livestock held for sale, fish in farms, crops such as maize
and wheat, and trees being grown for lumber. Consumable Biological Assets –
 is a living animal or plant. (Par. 9, PPSAS 27) Biological Asset –
 are the incremental costs directly attributable to the disposal of an asset, excluding
finance costs and income taxes. (Par. 9, PPSAS 27) Costs to Sell –
 is the detachment of produce from a biological asset or the cessation of a biological
asset’s life processes. Growth –
 comprises the processes of growth, degeneration, production and procreation that
cause qualitative or quantitative changes in a biological asset. (Par. 9, PPSAS 27)
Biological Transformation –
 is a decrease in the quantity or deterioration in quality of an animal or plant. (Par. 11,
PPSAS 27) Degeneration –
 is an increase in quantity or improvement in quality of an animal or plant. Growth –
 is the management by an entity of the biological transformation and harvest of
biological assets for sale, including exchange or nonexchange transactions, or for
conversion into agricultural produce, or into additional biological assets. (Par. 9,
PPSAS 27) AGRICULTURAL ACT

 willing buyers and sellers can normally be found at any time

 is the systematic allocation of the depreciable amount of an intangible asset over its
useful life.
 prices are available to the public.
 the items traded in the market are homogeneous
 are identifiable non-monetary asset without physical substance.
 Their value in cultural, environmental and historical terms is unlikely to be fully
reflected in a financial value based purely on a market price
 Their value may increase over time
 It may be difficult to estimate their useful lives, which in some cases could be
several hundred years.
 is the application of research findings or other knowledge to a plan or design for the
production of new or substantially improved materials, devices, products,
processes, systems, or services before the start of commercial production or use.
 is original and planned investigation undertaken with the prospect of gaining new
scientific and technical knowledge and understanding.
 Legal and/or statutory obligations may impose prohibitions or severe restrictions on
disposal by sale

 Nature of Intangible Asset

 Acquisition of Intangible Asset
_____________________________________________________________________
1. the present value of the estimated future cash flows expected to be derived from
the continuing use of an asset and from its disposal at the end of its useful life.
Value in use of a cash generating asset –
2. is the amount at which an asset is recognized after deducting any accumulated
depreciation and accumulated impairment losses. Carrying Amount –
3. is the systematic allocation of the depreciable amount of an asset over its useful
life. Depreciation –
4. purchased, constructed, developed or otherwise acquired;
5. are transactions in which one entity receives assets or services, or has liabilities
extinguished, and directly gives approximately equal value (primarily in the form
of cash, goods, services, or use of assets) to another entity in exchange.
Exchange Transactions –
6. is the amount for which an asset could be exchanged or a liability settled,
between knowledgeable, willing parties in an arm’s length transaction. Fair
Value –
7. is the equivalent to at least five percent (5%) of the cost of an asset that the
entity would currently obtain from disposal of the asset, after deducting the
estimated costs of disposal, if the asset were already of the age and in the
condition expected at the end of its useful life, unless a more appropriate
percentage is determined by an entity based on their operation. Residual Value
–
8. is the amount of cash or cash equivalents paid and the fair value (FV) of the
other consideration given to acquire an asset at the time of its acquisition or
construction. Cost –
9. is the amount by which the carrying amount of an asset exceeds its recoverable
amount. Impairment Loss of a Cash-generating Asset –
10. the amount by which the carrying amount of an asset exceeds its
recoverable service amount. Impairment Loss of a Non Cash-generating
Asset – is
11. held for use in the production or supply of goods or services or to produce
program outputs;
12. for rental to others;
13. is the cost of an asset, or other amount substituted for cost, less its residual
value. Depreciable Amount –
14. the present value of the asset’s remaining service potential. Value in use
of a non-cash generating asset –
15. is the present value (PV) of the cash flows an entity expects to arise from
the continuing use of an asset and from its disposal at the end of its useful life or
expects to incur when settling a liability. Entity-specific Value –
16. for administrative purposes;
17. expected to be used during more than one reporting period
18. are transaction where an entity either receives value from another entity
without directly giving approximately equal value in exchange, or gives value to
another entity without directly receiving approximately equal value in exchange.
Non-exchange Transactions –
19. not intended for resale in the ordinary course of operations.
20. is the period over which an asset is expected to be available for use by an
entity; or the number of production or similar units expected to be obtained from
the asset by an entity. Useful Life –
21. is the higher of a non cash-generating asset’s fair value less costs to sell
and its value in use. Recoverable Service Amount –