Module-2-Intermediate-Accounting-3.pdf

Republic of the Philippines Laguna State Polytechnic University Province of Laguna ISO 9001:2015 Certified...

Republic of the Philippines Laguna State Polytechnic University Province of Laguna ISO 9001:2015 Certified Level I Institutionally Accredited LSPU Self-Paced Learning Module (SLM) Course Intermediate Accounting 3 (AE17) Sem/AY First Semester/2024 - 2025 Module No. 2 Lesson Title Statement of Financial Position Week 3 Duration Date Description This lesson will discuss the preparation of the statement of financial position and the of the related notes. Lesson Learning Outcomes Intended Students should be able to meet the following intended learning outcomes: Learning Identify each classification in the statement of financial position and the items Outcomes which must appear in each one Prepare a properly classified statement of financial position and in accordance with the provisions of PAS No.1 Demonstrate understanding on which information needs to be presented in the notes Targets/ At the end of the lesson, students should be able to: Objectives Prepare properly classified statement of financial position Prepare notes to financial statements Student Learning Strategies Online Activities (Synchronous / Asynchronous) A. Online Discussion via Google Meet You will be directed to attend in a one-hour class discussion on the statement of financial position and notes. To have access to the Online Discussion, refer to this link: ____________________. The online discussion will happen on ________, 2023, from ________AM. (For further instructions, refer to your Google Classroom and see the schedule of activities for this module) LSPU SELF-PACED LEARNING MODULE: INTERMEDIATE ACCOUNTING 3  Republic of the Philippines Laguna State Polytechnic University Province of Laguna ISO 9001:2015 Certified Level I Institutionally Accredited B. Learning Guide Questions: 1. What are the minimum information required to be included in the face of the statement of financial position? 2. What is the relevance of classifying assets/liabilities as current and non-current? 3. What are the items to be included in the notes to financial statements? Note: The insight that you will post on online discussion forum using Learning Management System (LMS) will receive additional scores in class participation. Offline Activities (e-Learning / Self-Paced) Lecture Guide Structure and content of financial statements in general Philippine Accounting Standards (PAS 1) requires an entity to clearly identify: (PAS 1.49- 51) the financial statements, which must be distinguished from other information in a published document each financial statement and the notes to the financial statements. In addition, the following information must be displayed prominently, and repeated as necessary: (PAS 1.51) - the name of the reporting entity and any change in the name - whether the financial statements are a group of entities or an individual entity - information about the reporting period - the presentation currency (as defined by PAS 21 The Effects of Changes in Foreign Exchange Rates) - the level of rounding used (e.g. thousands, millions). Current/Non-current Distinction Present assets and liabilities separately under current and non-current classification unless presentation based on liquidity is reliable and more relevant. Assets and liabilities shall be presented in order of approximate liquidity (ascending or descending) Classify assets and liabilities as current if they are: Involved in the operating cycle Expected to be realized or settled within twelve months from the reporting date. Classify an asset as current when: It is cash or a cash equivalent (unless restricted) It is held primarily for the purpose of trading It is expected to be realized, sold or consumed within the entity’s normal operating cycle It is expected to be realized within twelve months after the reporting date LSPU SELF-PACED LEARNING MODULE: INTERMEDIATE ACCOUNTING 3  Republic of the Philippines Laguna State Polytechnic University Province of Laguna ISO 9001:2015 Certified Level I Institutionally Accredited Classify all other assets as non-current Classify a liability as current when: It is expected to be settled in the entity’s normal operating cycle It is held primarily for the purpose of trading It is expected to be settled within twelve months after the reporting date The entity does not have an unconditional right to defer settlement of the liability for at least twelve months after reporting date Classify all other liabilities as non-current When a long-term debt is expected to be refinanced under an existing loan facility, and the entity has the discretion to do so, the debt is classified as non-current, even if the liability would otherwise be due within 12 months (PAS 1.73) If a liability has become payable on demand because an entity has breached an undertaking under a long-term loan agreement on or before reporting date, the liability is current, even if the lender has agreed, after the reporting date and before the authorization of the financial statement for issue, not to demand payment as a consequence of the breach (PAS 1.74) The liability is classified as non-current if the lender agreed by the reporting date to provide a period of grace ending in at least 12 months after the end of the reporting period, within which the entity can rectify the breach and during which the lender cannot demand immediate repayment.(PAS 1.75) Settlement by the issue of equity instruments does not impact classification (PAS 1.76B) Presentation of Items in the Statement of Financial Position Present material items of different nature or function separately PFRS does not prescribe sequence or format of presentation Sub-classification of Assets Trade and other receivables showing separately: o Amounts receivable from trade customers o Amounts due from related parties o Amounts due from other parties o Receivables arising from accrued income not yet billed Inventories o Held for sale in the ordinary course of business o In the process of production for such sale o In the form of materials and supplies to be consumed in the production process or rendering of services Property, plant and equipment in classifications appropriate to the entity Sub-classsification of liabilities Trade and other payables showing separately: LSPU SELF-PACED LEARNING MODULE: INTERMEDIATE ACCOUNTING 3  Republic of the Philippines Laguna State Polytechnic University Province of Laguna ISO 9001:2015 Certified Level I Institutionally Accredited o Amount payable to trade creditors o Amounts payable to related parties o Deferred income o Accrual Provision for employee benefits and other provision Classes of equity o Paid-in capital o Share premium o Retained earnings o Income and expenses recognized in other comprehensive income Classes of equity o Paid-in capital o Share premium o Retained earnings o Income and expenses recognized in other comprehensive income For each class of share capital: o Number of shares authorized o Number of shares issued o Par value per share o Reconciliation of number of shares outstanding at the beginning and at the end of the period. o Rights, preferences and restrictions attaching to that class o Treasury shares or shares held by its subsidiary or associates o Shares reserved for issue under options and contracts for the sale of shares including terms and amounts A description of each reserved in the equity Format of Statement PAS 1 does not prescribe the format of the statement of financial position. Assets can be presented current then non-current, or vice versa and liabilities and equity can be presented current then non-current then equity, or vice versa. A net asset presentation (assets minus liabilities) is allowed. The long-term financing approach used in UK and elsewhere – fixed assets +current assets-short term payables = long term debt plus equity, is also acceptable. Engaging Activities To be posted online using Google classroom LSPU SELF-PACED LEARNING MODULE: INTERMEDIATE ACCOUNTING 3  Republic of the Philippines Laguna State Polytechnic University Province of Laguna ISO 9001:2015 Certified Level I Institutionally Accredited Performance Tasks Multiple Choice questions to be given ONLINE, either Google classroom-based or through any other online software formats, if LMS is not feasible. LSPU SELF-PACED LEARNING MODULE: INTERMEDIATE ACCOUNTING 3  Republic of the Philippines Laguna State Polytechnic University Province of Laguna ISO 9001:2015 Certified Level I Institutionally Accredited Understanding Directed Assessment Rubrics Criteria 4 3 2 1 Identified Correctly identified Correctly identified Made at least one Answer was and proper accounting proper accounting, major mistake mostly wrong; addressed and supporting but left out minor or with clear that accounting details. supporting details identification, student did not issues estimation, or know how to proper accounting conceptualize or approach problem. Standards Identified and Identified and At least one major Many mistakes and Rules assessed all assessed most omission when when identifying relevant standards relevant standards identifying and and assessing and rules and rules; made assessing relevant relevant minor mistakes standards and standards and rules rules Measurement Used the most Used acceptable Made one or more Failed to identify and relevant and reliable and relevant major mistakes or use reliable Disclosures reliable measurement and per relevant and measurement measurement and disclosure criteria; reliable and disclosure disclosure criteria minor mistakes or measurement and criteria omissions disclosure criteria Logical Completely and Acceptable job of Major omissions Was mostly or Inference correctly analogized analogizing from when analogizing completely from existing rules existing rules to from existing unable to to situations not situations not rules to situations analogize from explicitly addressed explicitly addressed not explicitly existing rules to by current by standards and addressed by situations not standards or authoritative standards and covered by authoritative sources; left out authoritative standards and sources. some details or sources authoritative reasoning. sources Learning Resources LSPU SELF-PACED LEARNING MODULE: INTERMEDIATE ACCOUNTING 3  Republic of the Philippines Laguna State Polytechnic University Province of Laguna ISO 9001:2015 Certified Level I Institutionally Accredited Cabrera, Ma. Elenita; Ocampo, Reynaldo (2019) Conceptual Framework and Accounting Standards,Manila: GIC Enterprises & Co., Inc MIllan, Zeus Vernon B (2019). Conceptual Framework & Accounting Standards. Bandolin Enterprise. Millan, Zeus Vernon B (2019).Intermediate Accounting Volume 3. Bandolin Enterprise. Robles. N. and Empleo, P. (2019) Intermediate Accounting Volume 3. Mutual Books, Inc. Valix, C. & Valix, C. (2018).Financial Accounting Volume 3. Manila: GIC Enterprises & Co., Inc. Philippine Accounting Standards (PAS) and Philippine Financial Reporting Standards (PFRS) issued by FRSC. International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) issued by IASB. SIC and IFRIC issued by IASC and IASB PIC Questions and Answers prepared by PIC and approved by FRSC www.iasplus.com This module is for educational purpose only. Under section 185 of R.A. 8293, which states, “The fair use of a copyrighted work for criticism, comment, news reporting, teaching including multiple copies for classroom use, scholarship, research, and similar purposes is not an infringement of copyright”. The unauthorized reproduction, use and dissemination of this module, without joint consent of the authors and LSPU, is strictly prohibited and shall be prosecuted to the full extent of the law, including appropriate administrative sanctions, civil and criminal. LSPU SELF-PACED LEARNING MODULE: INTERMEDIATE ACCOUNTING 3