| - Presentation of Financial Statements (PPSAS 1)
- Considering the significant changes in the accounting policies as a result of the first time adoption of the PPSAS in CY 2014, comparative information for CY 2013 and CY 2014 is not required. Thus, the CY 2014 financial statements shall reflect CY 2014 balances only. After CY 2014, comparative information for the current and immediately preceding year shall be reflected in the FS.
- The effects of the changes in the accounting policies/estimates for all accounts as result of the first time adoption of the PPSAS shall be disclosed.
- However, agencies may prepare comparative FS with proper disclosure, if required for other purposes.
- Borrowing Costs (PPSAS 5). The entity shall capitalize only those borrowing costs incurred after January 1, 2014 that meets the criteria for capitalization.
- Consolidated Financial Statements (PPSAS 6) and Interests in Joint Venture (PPSAS 8). Entities with controlled entities or interest in joint ventures which are required to prepare consolidated financial statements are allowed up to three years from January 1, 2014 to fully eliminate the balances and transactions between entities within the economic entity.
- Leases (PPSAS 13)
- Entities which have pre-existing leases shall determine whether these are finance or operating leases.
- The entity shall recognize a lease classified as a finance lease retrospectively in accordance with PPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors. Appropriate financial statement presentation, disclosures and/or adjusting entries shall be prepared/effected.
- However, if an entity does not have the information necessary to apply the amendments retrospectively, it shall:
- Apply the amendments to those leases on the basis of the facts and circumstances existing as of January 1, 2014; and
- Recognize the asset and liability related to the lease classified as finance lease at their fair values (FVs) on that date; any difference between those FVs is recognized in accumulated surplus/(deficit).
- Investment Property (PPSAS 16)
- The entity shall recognize the effect of the initial recognition of investment property acquired before CY 2014 as an adjustment to the opening balance of “Accumulated Surplus/(Deficit)” for CY 2014.
- The entity shall also recognize the accumulated depreciation and accumulated impairment losses that relate to the depreciable investment property, as if it had always applied those accounting policies.
- If the investment property is an existing asset or was previously recognized as asset of an entity other than investment property, recomputation of the accumulated depreciation and carrying amount shall be made before effecting the reclassification.
- The estimated useful life and the estimated residual value used for Property, Plant and Equipment (PPE) shall be applied to depreciable investment property.
- Property, Plant and Equipment (PPSAS 17)
- Public Infrastructures
- An entity shall recognize the cost and the related accumulated depreciation and impairment losses of existing public infrastructure assets based on the data in the Registry of Public Infrastructures (RPIs) previously maintained under the NGAS and the estimated useful life as may be determined by competent authority, if practicable. The RPIs shall no longer be maintained.
- If not practicable, the alternative approach of depreciated replacement cost approach may be used to determine the cost and the accumulated depreciation. The Depreciated Replacement Cost Approach is an approach used to determine the value in use of a non-cash generating asset. Under this approach, the present value of the remaining service potential of an asset is determined as the depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the asset’s gross service potential. This cost is depreciated to reflect the asset in its used condition.
- The estimated life of the public infrastructure assets shall be 20-40 years. Based on this life span, the entity shall prepare the specific estimated useful life for each specific assets based on their experience, copy furnished the Agency COA Auditor and the Government Accountancy Sector, COA.
- The effect on the recognition of the public infrastructure assets shall be applied retrospectively or directly to “Accumulated Surplus/(Deficit)”.
- Starting January 1, 2014 an entity is allowed up to five years to fully comply with the provisions of PPSAS 17.
- PPE controlled but not owned by the entity
- An entity shall, in accordance with PPSAS 17, recognize the cost and the related accumulated depreciation and impairment losses of existing PPE which were not previously recognized due to absence of ownership/title based on contract, memorandum of agreements and other reasons.
- If no documents are available, an entity shall recognize the cost of the PPE based on fair value as of: (a) the date of the acquisition, it available, or (b) January 1, 2014, or (c) at the date the FV was determined.
- For PPE acquired in an exchange of asset, initial measurement shall be applied prospectively or only to future transactions, as follows:
- The cost of such an item of PPE is measured at FV unless (a) the exchange transaction lacks commercial substance, or (b) the FV of neither the asset received nor the asset given up is reliably measurable.
- The acquired item is measured in this way even if an entity cannot immediately derecognize the asset given up.
- If the acquired item is not measured at FV, its cost is measured at the carrying amount of the asset given up.
- The effect on the recognition of depreciation as a result of the change in the estimated residual value to 5 per cent of the cost shall be applied prospectively.
- The estimated useful lives of PPE prescribed under COA Circular No. 2003-007 dated December 11, 2003, as amended, shall continue to be used until revoked/amended.
- The accounting policy on tangible assets with serviceable life of more than one year but small enough to be considered as PPE as provided under COA Circular No. 2005-002 dated April 14, 2005, which revoked the threshold of P10,000 for semi-expendable items, shall continue to be applied until revoked/amended.
- Provisions, Contingent Liabilities and Contingent Assets (PPSAS 19).
- Entities shall adjust the opening balance of “Accumulated Surplus/(Deficit)” for the Cy 2014 to recognize the provisions, if applicable and practicable. If not practicable, this fact shall be disclosed in the notes to financial statements.
- Impairment of Cash and Non-Cash-Generating Assets (PPSAS 21 and PPSAS 26).
- The recognition of impairment and reversal of impairment shall he applied prospectively.
- Revenue from Non-Exchange Transactions (Taxes and Transfers) (PPSAS 23)
- Revenue generating entities are not required to change their accounting policies with respect to the recognition and measurement of taxation revenue for reporting periods beginning on January 1, 2014 and five years thereafter.
- Entities are not required to change their accounting policies with respect to the recognition and measurement of revenue from non exchange transactions other than taxation revenue, for reporting periods beginning on January 1, 2014 and three years thereafter.
- Changes in accounting policies with respect to the recognition and measurement of revenue from non-exchange transactions made before the expiration of the five-year period permitted for taxation revenue, or the three-year period permitted for revenue from non- exchange transactions, other than taxation revenue, shall only be made to better conform to the accounting policies prescribed in PPSAS 23. Entities may change their accounting policies with respect to revenue from non-exchange transactions on a class-by- class basis subject to the review and approval of the Commission on Audit.
- When an entity takes advantage of the above transitional provisions for revenue from non-exchange transactions, that fact shall be disclosed. The entity shall also disclose (a) which classes of revenue from non-exchange transactions are recognized in accordance with PPSAS 23, (b) those that have been recognized under an accounting policy that is not consistent with the requirements of PPSAS 23, and (c) the entity's progress towards implementation of accounting policies that are consistent with PPSAS 23. The entity shall disclose its plan for implementing accounting policies that are consistent with PPSAS 23 in the Notes to Financial Statements.
- When an entity takes advantage of the transitional provisions for a second or subsequent reporting period, details of the classes of revenue from non-exchange transactions previously recognized on another basis but which are now recognized in accordance with PPSAS 23 shall be disclosed.
- Agriculture (PPSAS 27).
- An entity shall recognize the effect of initial recognition of the biological assets and the produce as an adjustment to the opening balance of “Accumulated Surplus/(Deficit)” for the period ending December 31, 2014.
- Financial Instruments (PPSAS 28, 29 and 30).
- An entity shall apply the transitional provisions in PPSAS 28, 29 and 30, unless impracticable.
- Intangible Assets (PPSAS 31)
- An entity shall apply PPSAS 31 prospectively.
- Where prior to January 1, 2014, existing computer software were recognized as part of PPE and the carrying amount of which can be determined separately from those of the PPE, these shall be recognized as intangible assets. The carrying amount as of January 1, 2014 shall he used in initial recognition. Those that cannot be determined separately shall continue to be recognized as PPE.
- Service Concession Arrangements: Grantor (PPSAS 32). A grantor (government entity) with existing service concession arrangements as of December 31, 2014 shall recognize and measure service concession assets and the related liabilities in accordance PPSAS 32 from the effectivity of the agreement.
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