TRADE AND NON-TRADE RECEIVABLE

RECEIVABLE
- A Financial asset that represent a contractual right to receive cash or another financial
asset from another entity.
 Financial Assets – means later on magiging cash or will be converted into cash
 Receivabe – is something na kokolektahin mo.

1. TRADE RECEIVABLES
- Refers to claim arising from sale of merchandise or services in the ordinary course of
business.
 Trade - means ginagamit mo sa negosyo/ ordinary course of business. Magiging
trade yan kung lagi syang gamit ng operation mo.
 Sale of merchanding or Sale of services
 CLASSIFICATION: TRADE – CURRENT ( ALWAYS )
Why? Dahil bahagi nga sya ng lagi operation ng business.
 Kailan ba masasabi na yung isang asset is Current?
 PART OF OPERATING CYCLE – means yung ordinary o regular mong ginagawa.
 12 MONTHS OR LESS – in a sense na kung makokolekta mo sya within 12 MONTHS.
 The point is if ikaw ay TRADE RECEIVABLE it doesn’t matter. Kasi pumasok kana sa
letter B. So it means matik CURRENT. So kahit meron kang TRADE RECEIVABLE MORE
THAN 1 YEAR. It doesn’t matter dahil pumasok na sa Criteria na ‘’PART OF
OPERATING CYCLE.’’
 HELD FOR THE PURPOSE OF BEING TRADED – nornmally ang mga pinapasok dito ay
kapag mga INVENTORIES.

2. NON-TRADE RECEIVABLES
- Represent claims arising from sources other than the sale of merchandise or services
in the ordinary course of business.
 Residual definition ito dahil ang sabi ay ‘’Other than’’
 CLASSIFICATION: NON-TRADE
A. 12 MONTHS or LESS (CURRENT)
- Basta pumasok sa Criteria ng CURRENT ASSET. CURRENT. Therefore kahit sya
at NON TRADE hindi sya part ng operating cycle, pero pumasok sya sa
criteria na 12 MONTHS or LESS ( CURRENT ) then that means it’s Current.

B. MORE THAN 12 MONTHS (NON-CURRENT)

 CLASSIFICATION:
TRADE - Current ( ALWAYS )
NON-TRADE – a. 12 MONTHS or LESS (CURRENT)
b. MORE THAN 12 MONTHS (NON-CURRENT)
 WHAT IS A CURENT ASSET?

a. Cash and Cash Equivalents

b. Part of operating cycle
c. 12 MONTHS or LESS
d. Held for the purpose of being traded

TRADE RECEIVABLES
a. Current ( ALWAYS )

 ACCOUNTS RECEIVABLE
- Are open accounts arising the goods and sale of services in the ordinary course of
business and not supported by the promisory notes.
- Mga receivable na nag arise kasi meron kang customer at pumayag ka na pautangin
sila kahit walang promisory notes.
- ALWAYS CURRENT.

 NOTES RECEIVABLE
- Are those supported by formal promises to pay in the forms of notes.
- Promisory notes – means may ibidensya nung nag pautang ka.
- Walang sinabi na part sya ng ordinary cycle of business. So if the problem is silent we
will assume na it is TRADE ( CURRENT )
- Kapag SILENT may NOTE na sya. Unang thingking natin is part na sya ng operating
cycle/ordinary course of business. Kasi bakit kapa magpapautang? Kasi nga diba ang
purpose ng mismong negosyo mo is mag benta ng produkto mo. At nung nagpautang
ka at magkakaroon ng NOTE.

 TAKE NOTE: Kapag SILENT ang problem at walang sinabi if CURRENT or NON-CURRENT,
TRADE or NON-TRADE. The answer is TRADE so always CURRENT.

Pwede rin bang maging NON-CURRENT ang Notes Receivable?

- Yes, dahil wala nga sa definition na part sya ng operating cycle. So may pagkakataon
na nagpautang ka, merong NOTE pero hindi bahagi ng operation ng business.
 NON-TRADE RECEIVABLES
a. 12 MONTHS or LESS (CURRENT)
b. MORE THAN 12 MONTHS (NON-CURRENT)

- Ipapasok natin yung Rule on Silence with the ff dahil pwede nga syang Current or Non-
current.
- Non Trade means hindi sila related directly sa business.

1. Advances to or ‘’receivable from’’ shareholders, directors, officer or employees.

 Advances to – ikaw ang nag pautang.
 Advances from – ikaw ang may utang.

 What if the problem is SILENT? then you will assume that this account is NON-CURRENT.
- Pag SILENT i-apply mo sa totoong buhay. Like pagnag pautang ka sa shareholders,
directors, officer. Sa tingin mo sa totoong buhay sino ang nag dedesisyon? Diba sila. So
kung walang sinabi or if the problem is silent hindi mo sila masisingil immediately.
- Pero kapag may sinabi na LESS THAN 12 MONTHS. Therefore it will become CURRENT.

2. Advances to affiliates
 Affiliates – is another company, or pwedeng sister/parent company mo. The point is
company din sya na related sayo.

 What if the problem is SILENT? then you will assume that this account is NON-CURRENT.
- Why? if the problem is silent hindi mo rin sila masisingil immediately.

3. Advances to suppliers
 What if the problem is SILENT? then you will assume that this account is CURRENT.
- Mamimili ka, nagbayad ka in advance sakanila so regular mo silang katransaction.
Therefore, normally collectible yan currently, dahil regular mong kausap ang supplier
mo.
- Ikaw ang naglabas ng pera una sa supplier. Kaya receivable padin to. NON-TRADE nga
lang. Kasi going to supplier.

4. Subscription receivable
 Remember the topic in Coporation? Merong gustong sumaliang tawag don ay
‘’Subscriber’’ hindi pa sya bayad that’s why there is ‘’Subscription receivable’’

 What if the problem is SILENT? then you will assume that this account is NON-CURRENT.
- Why? Kasi hindi mo rin masisingil immediately.
- PRESENTATION: hindi mo ilalagay as a Non-current receivable but rather i-p’present
mo sya as PART OF EQUITY as a DEDUCTION.
  What if sinabi na CURRENT sya? Therefore it will be CURRENT.
- PRESENTATION: not a Deduction of equity but rather ADDITION OF THE ASSET.

5. Creditors account with debit balances

- Nangutang ka normally CREDIT BALANCE yon pero biglang naging DEBIT BALANCE.
EG SCENARIO: for example namimili ka ng goods therefore may utang ka. Diniliver sayo
malayo. Therefore may naka record 100K na credit balance yon. The later on nag down
payment ka ng 50K. So magkano pa utang mo? 50K nalang. Then later on nag return ka.
Pupwedeng kasing dumating yung goods pero nakapag bayad kana. Dumating ng may mga
sira. E malayo yung lugar.
- Paano kung sakali yung amount noon ay 60K? medyo masyadong mataas, therefore mag
dedebit ka nanaman sa payable mo. The point is nakapag downpayment ka ng 50K pero may
return ka pala na 60K. So lalabas na mas malaki na yung DEBIT kaysa don sa credit 110K na.
Kaya ang tawag don ‘’Creditors account with debit balances.’’ So therefore napasobra.
Meron kang receivable. 10K.
- Pag sinolve mo yan magkakaron ka ng DEBIT BALANCE amounting to 10K even though
originally creditors account nga. LIABILITY sya pero dahil sya ay NAG DEBIT BALANCE, magigi
syang RECEIVABLE. Ayaw kasi ng Accounting ng OFFSETTING that’s why it become a
receivable.

ACCOUNTS PAYABLE

50,000 100,000
60,000
110,000

RECEIVABLE: 10,000

 What if the problem is SILENT? then you will assume that this account is CURRENT.
- Ikaw yung nag debit balance. Sa tingin mo ba papatagalin moyan ng more than 1 year
para makolekta sakanila, diba hindi.
- At isa pa normally supplier yan.

6. Special deposit on contract bids

- Saan ito nangyayari? So lalawakan natin ang pagtingin natin sa negosyo. Minsan kasi
pumapasok ka sa mga kontrata na mga nagbi-bidding. Let’s say gagawa ng tulay. Kung
ikaw yung nanalong kontraktor, meron kang obligasyon na tapusin yung kontrata na
‘yon. Dahil meron kayong usapan na kailangan mong i-fullfill yung kontrata nayon,
minsan nagiging sigurista din yung other side/party. Therefore nanghihingi sila ng
deposit. Para totoong tapusin mo yung kontrata.
- So sa POV moikaw yung naglabas ng pera nayon. Therefore makokolekta mo yun sakanila
kapag natapos nayung kontrata.
 - Special deposit – dinedeposit mo on contract bids.

- May RECEIVABLE kaba? YES. Kasi makokolekta mo nga yon. NON-TRADE nga lang
kasi hindi naman related sa negosyo but because of the contracts the deposits.

 What if the problem is SILENT? then you will assume that this account is NON-CURRENT.
- WHY? Kasi normally ano yung mga tagal ng mga ganitong kontrata? MATATAGAL.
Malakihan kasi yang mga yan. So therefore it is Non-current.

7. Accrued Income
- Those are services already perforemed but the cash is not yet collected.
- Hindi nga lang for ordinary coutrse of business but other things that’s why it’s NON-
TRADE.

 What if the problem is SILENT? then you will assume that this account is CURRENT.
- Usually that’s accrued income sa interest. Sa Royalties, sa Dividends. Yung mga usual
sources of income.
- NOTE: Tingnan pa rin yung mga account mismo, you have to analyze.

8. Claims receivable
- Kailan to nangyayari? Ito ay kung sakaling na damage ka, meron kang kokolektahin
sakanila.
- E.G: Yung paninda mo pinasakay mo, nag babyahe sa currier, then later on na damage
yung merchandise so kasalanan nila therefore may kokolektahin ka sakanila na
receivable.
- Or any other things sa mga acts o bagay na nag cause ng damage sayo.

 What if the problem is SILENT? then you will assume that this account is CURRENT.
- NOTE: Tingnan pa rin yung mga account mismo, you have to analyze.