First Time

PFRS 1:

Adoption of PFRS
Two Factors
 The date of adoption of PFRS
NATURE  The number of years of comparative
information that an entity decides to presents
together with the financial statements in the
First Time Adopter
year of adoption.
 It is an entity that presents for the first time its
financial statements in conformity with
Philippine Financial Reporting Standards.
First PFRS financial statements
RECOGNITION
 It is the first annual statements in which an
entity adopts PFRS by an explicit and  Financial statements presented by an entity in the
unreserved statement of compliance with PFRS. current year would qualify as first financial
Conditions: statements under the following conditions:
1. When an entity presented its most recent
1. When an entity presented its most recent
previous financial statements:
previous financial statements:
a. Under national GAAP inconsistent with
PFRS in all respects. a) Under national GAAP inconsistent
b. In conformity with PFRS in all respects with PFRS in all respects.
but these statements did not contain an b) In conformity with PFRS in all
explicit and unreserved statement of respects but these statements did
compliance with PFRS. not contain an explicit and
c. Containing an explicit statement of unreserved statement of
compliance with some but not all PFRS. compliance with PFRS.
d. Under national GAAP with a c) Containing an explicit statement of
reconciliation of selected figures to compliance with some but not all
amounts determined under PFRS. PFRS.
2. When an entity prepared financial statements d) Under national GAAP with
in the previous period under PFRS but the reconciliation of selected figures to
financial statements were for internal use only. amounts determined under PFRS.
3. When an entity prepared financial statements
in the previous period under PFRS for 2. When an entity prepared financial
consolidation purposes without preparing a statements in the previous period under PFRS
complete set of financial statements. but the financial statements were for internal
4. When an entity did not present financial use only.
statements in the previous period.
3. When an entity prepared financial
statements in the previous period under PFRS
Date of Transition to PFRS for consolidation purposes without preparing
a complete set of financial statements.
 It refers to the beginning of the earliest period
for which an entity presents full comparative 4. When an entity did not present financial
information under PFRS in its first PFRS financial statements in the previous period.
statements.
 An opening PFRS statement of financial position is
the statement of financial position prepared by a
first time adopter on the date of transition to
PFRS.
1. Recognize all assets and liabilities
required by PFRS.
2. Derecognize assets and liabilities not
permitted by PFRS.
3. Measure all recognized assets and
liabilities in compliance with PFRS.

PRESENTATION

 If the entity adopts PFRS for the first time in the

current year, it should include the following:
1. Three statements of Financial Position (
At the end of the current year, at the end
of current year and at the date of
transition to PFRS)
2. Two statements of comprehensive
income (Current and prior year)
3. Two separate income statements
(Current and prior year)
4. Two statements of changes in equity
(Current and prior year)
5. Two statements of cash flow (Current and
prior year)
6. Notes to financial statements (Current
and prior year)
 PFRS 2: Share-Based
Payment
The compensation is based on the fair value of
the liability at the reporting date and shall be
NATURE measured ate every year-end until it is finally
settled.
Share-based compensation plan
Share Appreciation Right
It is a compensation arrangement established by
the entity whereby the entity’s employees shall The compensation is based on the fair value of the
liability at the reporting date and shall be
receive equity shares in exchange for their
remeasured at every year-end until it is finally settled.
services or the entity incurs liabilities to the Any changes in fair value are included in profit or
employees in amounts based on the price of its loss.
shares. It is also classifies into two: The fair value of liability is equal to the excess of
1. Equity settled the market value of share over a predetermined price
for a given number of share over a definite vesting
2. Cash settled period.
Share options
RECOGNITION
This are granted to officers and key employees to
enable them to acquire shares of the entity Compensation
during a specified period upon fulfillment of
certain conditions at a specified price. 1. If the share options vest immediately,
the employee is not required to
Share appreciation right complete a specified period of service
before unconditionally entitled to the
It entitles an employee to receive cash which is
share options.
equal to the excess of the market value of the
2. If the share options do not vest until the
entity’s share over a predetermined price for a
employee completes a specifies service
stated number of shares on settlement.
period the compensation is recognized
as expense over the service period or
MEASUREMENT vesting period.

Acceleration of Vesting
The compensation resulting from share options is
 PFRS 2, paragraph 28, provides that of an entity
measured following two methods: cancels or settles a grant of share options
1. Fair Value Method – The compensation during the vesting period, the entity shall
is equal to the fair value of the share account for the cancelation or settlement as an
options on the date of grant. acceleration of vesting.
2. Intrinsic Value Method – The a) The entity shall recognize immediately
the compensation expense that
compensation is equal to the intrinsic
otherwise would have been recognized
value of the share options. for services received over the
remainder of the vesting period.
 b) Any payment made to the employee on
the cancelation or settlement of the
grant shall be accounted for as the
repurchases of equity interest, meaning
deduction form equity.
In other words, if the payment exceeds
the fair value of the share options, the
excess shall be recognized as an
expense.

Share Appreciation Right

a) If the share appreciation right vests

immediately, the compensation is recognized
immediately.
b) If the share appreciation right does not vest
until the employee completes a definite vesting
period, the compensation is recognized over
the vesting period.
 PFRS 2:Noncurrent
Asset Held for sale
Abandoned noncurrent asset
NATURE  Shall not classify as held for sale noncurrent
asset or disposal group.
Temporarily abandoned
Noncurrent asset
 Shall not account for a noncurrent asset that
It is an asset that does not meet the definition has been temporarily taken out of use as if it
of current asset. had been abandoned.
Noncurrent Asset Held for Sale Change in classification
It means that the entity does not intend to use  Circumstances could arise leading to the
the asset as part of the on-going business but noncurrent asset no longer being classified as
intends to sell and recover the carrying amount held for sale.
principally through sale.  In such case, the entity shall measure the
Conditions: noncurrent asset that ceases to be classified as
1. The asset or disposal group is available for held for sale at the lower between:
immediate sale in the present condition. o Carrying amount of the asset on the
2. The sale must be highly probable. basis that the asset had not been
classified as held for sale.
o Recoverable amount at the date of the
MEASUREMENT subsequent decision not to sell.

Measurement of Noncurrent Asset Held for Sale PRESENTATION

 It shall be measured at the lower of carrying
amount or fair value less cost of disposal.
 It shall not be depreciated. Presentation of asset classified as held for sale
 Noncurrent asset that is already classified as
Writedown to fair value less cost of disposal held for sale shall be presented separately as
 If the fair value less cost of disposal is lower current asset.
than the carrying amount of the asset or  If the noncurrent asset is disposal group
disposal group, the writedown to fair value less classified as held for sale, the asset and labilities
cost of disposal is treated as an impairment of the group shall be presented separately and
loss. cannot be offset as a single amount.
 If the noncurrent asset is a disposal group, the
impairment loss is apportioned across the
assets based on carrying amount.

RECOGNITION
Subsequent increase in fair value
 An entity shall recognize a gain but not in excess
of any impairment loss previously recognized.