Comparison

of
Accounting
for SMML
Entities
 Large Medium Small Micro

Total Assets; or; Total A > P350M A > P100M-P350M A = P3M-P100M or

Liabilities or or L = P3M-P100M A&L < P3M
L > P250M L > P100M-P250M

Required to file financial

statements under Part II of ✔ X X X
SRC Rule 68

Are in the process of filing

their financial statements
for the purpose of issuing ✔ X X X
any class of instruments in
a public market

Are holders of secondary

licenses issued by ✔ X X X
regulatory agencies

Financial Reporting Option to either:

Framework Full PFRS PFRS for SMEs PFRS for SEs ● PFRS for SEs;
or
● Income tax
basis
 Topics not Included
Large Medium Small Micro
● Earnings per share ● Hyperinflation
● Interim Financial ● Exploration for and evaluation of mineral
Reporting resources
● Segment reporting ● Service concession arrangements
● Insurance
● Special accounting
for assets held for
sale
 General Features
Large Medium Small Micro
The same provisions on the definition, recognition, and measurement of elements of
FS

Measurement bases: Measurement bases:

● historical cost ● Historical cost
● current cost ● Fair value
● realisable value
● present value.

The same provisions on the general features in the preparation of FS

 General Features
Large Medium Small Micro
Underlying Assumptions

● Accrual basis
● The entity is a going concern
● Offsetting assets and liabilities or income and expenses is not permitted unless it is required or permitted
 General Features
Large Medium Small Micro
Qualitative Characteristics: Qualitative Characteristics Same with SMEs
● Relevance ● Understandability
○ Predictive ● Relevance
○ confirmatory ● Materiality
● Faithful ● Reliability
Representation ● Substance over
○ Completeness form
○ Neutrality ● Prudence
○ Free from ● Completeness
error ● Comparability
● Timeliness
Materiality SubQ of ● Achieving a balance
Relevance between benefit &
cost
 General Features
Large Medium Small Micro
Complete set of FS

Same with SMEs A. Statement of Financial ● Statement of Financial Position

plus Position ● Statement of Income
● Comparative B. Statement of ● Statement of Changes in Equity
information Comprehensive Income ● Statement of Cash Flows
C. Statement of Changes in ● Notes
Equity
D. Statement of Cash Flows
E. Notes
(Under certain circumstances, the
statements under (b) and (c) may
be combined into one statement of
income and retained earnings)
 Statement of Financial Position
Large Medium Small Micro
Components are similar

3rd BS prepared when: 3rd BS not required

● Applies acctg policy
retrospectively
● Makes retrospective
restatement
● Reclassifies items

Requires practically the same line items to be No line items specified

presented on the face of the BS
 Statement of Financial Position
Large Medium Small Micro
Required to be presented: Not required
● Total assets classified
as held for sale
● Total liabilities included
in disposal group
classified as held for
sale
● Property dividends held
for distribution to
owners

Requires presentation of Requires presentation for both

investment in associates but
not investment in joint
ventures
 Statement of Changes in Equity
Large Medium Small Micro
Always presented when Omission allowed an in lieu, present a single
entity prepares GPFS statement of income and retained earnings
 Statement of Income & Retained
Earnings
Large Medium Small Micro
Not permitted However, Single statement of income and RE
permitted

If only changes in equity arise from:

● P/L
● Dividends paid
● Prior period error correction
● Changes in accounting policy
 Comprehensive Income
Large Medium Small Micro
The same provisions on the presentation of total No statement of
comprehensive income comprehensive
income

Always presented when an If has no items for

entity prepares a comprehensive income,
complete set of GPFS, ● may present only IS
either as ● Or
single/component of two- ● May present
statement presentation compre income w/
bottom line labeled
as P/L
 Comprehensive Income
Large Medium Small Micro
Components of OCI: Components of OCI: No components
● G/L from translation of FS of a ● In Revaluation surplus
foreign operation ● Some actuarial G&L
● Remeasurements of the NDBL ● Some G&L from
● Unrealized G/L from derivative translation of FS of
contracts - hedging foreign operation
● Unrealized G/L on equity & debt ● Some changes in FV of
investment @FVOCI hedging instruments
● In Revaluation surplus
● The change in FV attributable to FVOCI not available for SMEs
credit risk of fin. L @FVPL
● In time value of option when the
option’s intrinsic value and time
value are separate and only the
changes in intrinsic value is hedging
● In value of forward elements of
 Cash Flows
Large Medium Small Micro
Same presentation of cash flows from;
● Operating;
● Investing; and
● Financing activities

However, SMEs allows certain CF

to be reported on net basis
 Notes to FS, Related Parties, Events
after RP
Large Medium Small Micro
The same in structure or the matter of presenting notes to FS

Share the same provisions and information about judgments

Share the same provision for accounting and reporting events after the end of the reporting
period

Share the same provision on information about key sources of estimation Not required
uncertainty (required)

Generally has more extensive disclosure requirements

In PAS 24, an entity is required to disclose key Entity is required to

management personnel compensation in total for disclose key
each of the following category: short-term employee management
benefits, post-employment benefits, other long term personnel
benefits, termination benefits, and share-based compensation in
 Interim Financial Reporting
Large Medium Small Micro
Condensed Financial Statements

Provides guidance in the Does not include similar

preparation of provisions
condensed FS for interim
periods
 Reporting Periods
Large Medium Small Micro
Difference between end Does not include similar
of RP of associate and provision
the investor shall not
exceed 3 years
 Accounting Policies, Estimates, and
Errors
Large Medium Small Micro
The same provision and requirement w/ respect to the Effects of correction
following: of errors accounted
a. Selection of accounting policies for as an adjustment
b. Consistency of accounting policies of the RE, beg. Of the
c. Changes in accounting policies current period
d. Changes in accounting estimates
e. Correction of prior period error

Selection of accounting policies: Based on PFRS for

● Mngt considers IFRS as a SMEs
source of info
● Consider most recent
pronouncements of other
standard-setting bodies

Restatement of comparative FS due to correction of No restatement

 Recognition of Revenue from Contracts
w/ Customers
Large Medium Small Micro
PFRS 15 requires Requires simpler principle of “transfer of
application of “5-step” significant risks and rewards” in revenue
principle in recognizing recognition
the revenue
 Financial Instruments
Large Medium Small Micro
The same definitions of financial instrument,
financial asset, and financial liability

Classification of Financial Instruments

Classified either as: Classified either as:

a. Amortized cost a. Basic - non-
b. FVOCI mandatory complex
c. FVOCI elected i. Subs. Meas.
d. FVPL on basis of @AC EXPT
i. Business FVPL
model b. Non-basic
ii. Contractual CF i. Subs. Meas.
characteristics @FV P/L
 Financial Instruments
Large Medium Small Micro
Classification of Financial Instruments

Permitted to designate FVOCI not permitted

FA to be meas. @FVPL
Does not include option
to designate FA @FVPL
 Basic Financial Instruments
Large Medium Small Micro
Debt Instruments:
● Measured @AC ● @AC if not traded
● That are current
measured
@undiscounted
amount

Trading Securities Trading Securities

● @FVPL ● Lower of cost or FV
if traded in market
 Inventories and Revenue
Large Medium Small Micro
The same provisions related to definition,
measurement, cost of purchase, cost of conversion,
other cost, and cost formulas for inventories.

Inventories

Subsequent Meas. Subsequent Meas. Subs.Measurement

● LCNRV ● Lower of cost and Lower of cost and
selling price less costs market value
to complete and sell

Not mentioned in IAS 2 Most recent purchase price

in included as an example
of a technique to est. cost
of inventories
 Investment in Associate and Joint
Ventures
Large Medium Small Micro
The same definition

Investor has no accounting policy All investments in

choice. Shall be accounted for associates accounted
using equity method only for using:
● Cost model ● Cost model
● Equity method, or ● Equity method
● Fair value model

Covers:
● Guidance on significant Not covered
influence
● Consequences when an
investment ceases to be an
associate
● PL from upstream and
 Investment in Subsidiary
Large Medium Small Micro
Consolidated FS Option
required ● to prepare
consolidated FS or
● account for the
investment using
equity method
 PPE
Large Medium Small Micro
Measured using:
● Cost model or ● Cost model
● Revaluation model ● FV model

Separate depreciation Only when the parts have significantly different

for the items are patterns of benefit consumption
required

Annual review is Reviewed only if there is an indication they may

required have changed since the most recent annual report

The same w/ respect to other matters related to PPE, like;

● depreciation method,
● UL,
● RV,
● depreciation of significant components,
 Intangible Assets other than Goodwill
Large Medium Small Micro
Research and Development Cost

Expensed immediately. Expensed immediately unless

However, may be capitalized form part of cost of another asset
when specific criteria are met
No capitalization conditions

Subsequent Measurement

● @cost model or ● @cost model only

● @revaluation model

Useful Life

Either finite or infinite Considered finite. If not

measurable reliably, 10 years
 Intangible Assets other than Goodwill
Large Medium Small Micro
Impairment Test

● Finite - When there ● When there is indication

is indication
● Infinite - annually
and when there is
indication

Amortization

Only finite All are considered to have finite

useful life thus all are amortized
 Intangible Assets
Large Medium Small Micro
Implicit Goodwill on Acquisition

Goodwill relating to an Excess of acquisition cost

associate included in the over investment
CA of investment recognized as goodwill
and amortized over
estimated UL

No separate accounting If UL can’t be established

required for implicit reliably, shall base on
goodwill Mngt’s best estimate but
not exceed 10 years

Neither
amortization/separate
impairment testing of
 Accounting for Goodwill
Large Medium Small Micro
Those arising from After initial recognition,
business combination, @cost less accum. Depr.
not amortized but and accum. Impairment
tested for impairment loss
at least annually
 Business Combination
Large Medium Small Micro
Acquisition Method Purchase Method

Large
Excluded from scope of
OAS 41 Agriculture and
are classified as PPE under
PAS 16
@FV less cost to sell
Rebuttable presumption
of FV only on initial
recognition, @cost less
accum. Depr. and accum.
Impairment loss
Agriculture
Medium Small Micro
Bearer Plants
No equivalent provision
Measurement
Usually @cost less accum. ● Cost or
Depr. and accum. ● Current market
Impairment loss price
Initial and subsequent:
@FV less cost to sell only
when FV readily
available w/out undue
 Investment Property
Large Medium Small Micro
Measure at: ● Measured @FV if FV can be
● FV model or measured reliably w/out undue cost
● Cost model or effort
● Otherwise, account for as PPE using
If cost model, disclose the FV cost-depr-imp. model

When held by lessee under Measurement depends Depends on the

operating lease, must follow FV on the circumstances policy choice
model for all of the investment made by the
properties entity
 Government Grants
Large Medium Small Micro
Classification and Recognition

Either: No such provision

● Related to Assets
● Related in Income

Recognized in NI over ● No future obli, income when grant proceeds

periods necessary to are receivable
match with related cost ● Has future obli, only when met
● Grant received before revenue recognition
When cost already satisfied, liability
incurred, grant
recognized as income
@grant recognition date
 Government Grants
Large Medium Small Micro
Measurement

Monetary Grants:
● Amount of cash received @FV ● No recognition or
● FV of amount receivable ● @FV
● CA of L/P to Gov’t for w/c
repayment is forgiven
● Discount on L/P to gov’t
below-market rate of interest

Non-monetary Grants:
● FV of non-monetary asset
received
● Nominal amount/zero, plus
directly attributable costs
 Borrowing Costs
Large Medium Small Micro
Core Principle

Directly attributable All are expensed in period they are incurred

costs to construction or
production of a
qualifying A, form part
of the cost of A.

Others are expensed

 Impairment of Assets
Large Medium Small Micro
Practically the same with respect to the ff:
● Recognition & measurement of impairment loss
● Definition of FV less cost to sell ViU
● Internal & external indicators
● Reversal of impairment

Valu in Use Computation

CF projections shall cover
a max period of 5 yrs,
unless longer is justified.
Such will be extrapolated
Does not state specific time limit before extrapolation
required.
May wish to extrapolate CF projections beyond the
period covered by most recent budgets
 Income Tax
Large Medium Small Micro
Shares many of the basic principles in accounting
for income tax

Valuation allowance not Valuation allowance

applicable recognized for DTA so
that CA=highest amount
likely to be recovered

Income tax expense Income tax expense

must include: includes:
● Current tax ● Current tax expense;
expense; and and
● Deferred tax ● Deferred tax expense
expense (optional)
 Income Tax
Large Medium Small Micro
Same w/ SMEs but Shall not recognize a
applies to all DTA or DTL for
investments in temporary differences
subsidiaries, branches, w/ unremitted earning
associates, and joint from foreign op.
ventures, domestic or
foreign

An entity should make

an accounting policy
choice to account for IT
using either:
● Taxes payable
method
● Deferred income
 Provisions and Contingencies
Large Medium Small Micro
No significant differences

Shares the same principles for accounting and reporting provision and for
disclosing contingent liabilities and contingent assets

No provision for
onerous contracts
 Employee Benefits
Large Medium Small Micro
Defined Contribution Plan

Measured on Need not be discounted R-benefit exp.

undiscounted basis, Calculated using accrual
EXPT when not due w/in approach
12 mos after end of RP

Measurement of DBL

Requires use of Projected unit credit No consideration of `

projected unit credit method only if able to changes in future salary
method when do so w/out undue cost rates and service
measuring its obli or effort periods

Revised IAS19 requires Actuarial G/L in P/L or No recognition of

it to be recognized in OCI actuarial G/L
 Employee Benefits
Large Medium Small Micro
All past services costs are not registered as expense
immediate regardless of vesting

DBO is net total of ff:

● PV of DBO at year-end
● Minus the FV of PA at year-end

No more concept of expected return

Interest income on FV of All changes in FV of PA in

PA, beg. In P/L as P/L
component of employee
benefit expense

Diff. between actual

return on PA and int.
 Share-based Transactions
Large Medium Small Micro
Cash-settled Cash-settled
G/S acquired and liability G/S acquired and liability incurred are measured
incurred are measured @FV of Liability
@FV entity’s own equity
instruments

Equity-settled Equity-settled
1. The G/S received and The G/S received and The G/S received and
increase in equity @FV increase in equity increase in equity, w/
of G/S received @FV of G/S received reference to the net
2. FV of equity asset value of equity
instruments granted instruments granted
 Leases
Large Medium Small Micro
Practically the same w/ respect to the acctg and No concept of finance
reporting lease

Applies to all leases, EXT

● Leases in exploration
industry
● Licensing agreement
● Investment property
● Biological assets
● Leases resulting loss to
either party due to terms
unrelated to price changes
● Onerous operating leases
 Leases
Large Medium Small Micro
Lessee recognizes RoU Lessee classifies lease as Lessee account for as
and lease liability (gen) finance lease or operating operating lease
lease and account
accordingly

Allows lessee to apply

recognition exemption for
“short-term” or “low
value” lease. (practical
expedient)

Operating leases: (recog)

● income/expense on ● income/expense
straight-line basis when earned or
over lease term incurred
 Sale and Leaseback
Large Medium Small Micro
Both parties determine If:
if transfer of A qualifies Finance Lease; lessee:
as sale using PFRS 15 ● Defer any gain from
sale and amortize
If yes: over lease term
a. Lessor ● Recognize
● meas. RoU A from immediately any loss
leaseback from sale
@proportion of
previous CA of A that Operating lease; lessee;
relates to RoU ● If sale price @FV, any
retained by lessee G/L recognized
● Recognize only G/L immediately
transferred to lessor
 Sale and Leaseback
Large Medium Small Micro
If yes: ● If SP below FV, any G/L
a. Lessee recognized
● Account for purchase immediately.
of A applying However, when loss is
applicable standards compensated for by
● For the lease applyi future lease payments
the lessor acctg in below MP, temporary
PFRS 16 loss is deferred and
amortized over lease
If not, account as term
financing transaction ● If above FV, excess of
sale over FV is
deferred and
amortized over lease
term. If vice versa,
 Foreign Currency Translation
Large Medium Small Micro
The same concepts
 Event After RP
Large Medium Small Micro
Declaration of Dividends after RP

Not recognized but disclosed only

However, SMEs has

option of presenting
dividends as a
segregated component
of RE @end of RP
 Original Issue of Shares/Other Equity
Instruments
Large Medium Small Micro
Issue shares before Offset to equity in BS
considerations are
received, receivable
recognized as asset

No counterpart Receives consideration

provisions in full PFRS (nonrefundable) before
issuance of shares,
recognize increase in
equity to extent of
consideration received.

To extent of equity
instruments subscribed
but unpaid, no increase
Thank
You! Prepared By:

Bombase, Joy Agnes T.