Updates in Financial Reporting Standards

Philippine Financial Reporting Standards Title Effective Brief Description

(PFRS)/ Philippine Accounting Standards Date
(PAS)
Framework for the Preparation and Conceptual Framework Phase A: Objectives and 07/01/11 The Conceptual Framework creates a sound foundation for future accounting standards that are
Presentation of Financial Statements qualitative characteristics principles-based, internally consistent and internationally converged.

The Conceptual Framework deals with :

a) the objective of financial reporting;

b) the qualitative characteristics of useful financial information;

c) the definition, recognition and measurement of the elements from which financial
statements are constructed; and

d)concepts of capital and capital maintenance.

Improvements to PFRSs 2010 Improvements to PFRSs 2010 (A Collection 01/01/11 The annual improvements process aims to make necessary, but non-urgent, amendments to
of Amendments to Seven International IFRSs that will not be included as part of a major project. The latest set of improvements
Financial Reporting Standards) amends six standards and one interpretation. By presenting the amendments in a single
document rather than a series of piecemeal changes the IASB aims to ease the burden of
change for all concerned.

Unless otherwise specified, the amendments are effective for annual periods beginning on or
after
January 1, 2011, with earlier application permitted.
PFRSs Practice Statement Management PFRSs Practice Statement Management 06/29/11 The Practice Statement is not a PFRS and provides a broad, non-binding framework for the
Commentary Commentary presentation of management commentary that relates to financial statements that have been
prepared in accordance with PFRSs. Consequently, entities applying PFRSs are not required to
comply with the Practice Statement. Furthermore, non-compliance with the Practice Statement
will not prevent an entity’s financial statements from complying with PFRSs, if they otherwise
do so.

The Practice Statement is applicable to management commentary presented prospectively

starting on June 29, 2011.

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PAS 1 (Revised) Presentation of Financial Statements 01/01/09 This standard prescribes the basis for presentation of general purpose financial statements to
ensure comparability both with the entity's financial statements of previous periods and with
the financial statements, guidelines for their structure and minimum requirements for their
content.
The changes made will require information in financial statements to be aggregated on the
basis of shared characteristics and to introduce a statement of comprehensive income. This will
enable readers to analyze changes in a company’s equity resulting from transactions with
owners in their capacity as owners (such as dividends and share repurchases) separately from
‘non-owner’

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Philippine Financial Titl Effective Brief Description
Reporting Standards e Date
(PFRS)/ Philippine
Accounting Standards
(PAS)
changes (such as transactions with third parties).
The revised standard gives preparers of financial statements the option of presenting items of income and expense and components of
other comprehensive income either in a single statement of comprehensive income with subtotals, or in two separate statements (a
separate income statement followed by a statement of comprehensive income).
The revisions include changes in the titles of some of the financial statements to reflect theirfunction more clearly (for example, the
balance sheet is renamed a statement of financial position). The new titles will be used in accounting standards, but are not mandatory
for use in financial statements.
The revised standard introduces a requirement to present a statement of financial position at the beginning of the earliest comparative
period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective
restatement, as defined in PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, or when the entity reclassifies
items in the financial statements.

Amendment to PAS 1: 01/01/07 The Amendments to PAS 1 adds requirements for all entities to disclose the entity’s objectives, policies and processes for managing
Capital Disclosures capital; quantitative data about what the entity regards as capital; whether the entity has complied with any capital requirements; and if it
has not complied, the consequences of such non-compliance.

These disclosures provide information about the level of an entity’s capital and how it manages capital, which are important factors for
users to consider in assessing the risk profile of an entity and its ability to withstand unexpected adverse events.

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Amendments to PAS 32 01/01/09 This Standard requires a financial instrument to be classified as a liability if the holder of that instrument can require the issuer to
and PAS 1: Puttable redeem it for cash. This principle works well in most situations. However, many financial instruments that would usually be considered
Financial Instruments and equity, including some ordinary or common shares and partnership interests, allow the holder to ‘put’ the instrument (to require the
Obligations Arising on issuer to redeem it for cash). Currently these financial instruments are considered liabilities, rather than equity.
Liquidation
The amendments to PAS 32 address this issue and provide that puttable financial instruments will be presented as equity only if all of
the following criteria are met:

a. the holder is entitled to a pro-rata share of the entity’s net assets on liquidation;
b. the instrument is in the class of instruments that is the most subordinate and all instruments in that class have identical features;
c. the instrument has no other characteristics that would meet the definition of a financial liability; and
d. the total expected cash flows attributable to the instrument over its life are based substantially on the profit or loss, the change
in the recognized net assets or the change in the fair value of the recognized and unrecognized net assets of the entity
(excluding

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Philippine Financial Reporting Title Effective Brief Description
Standards (PFRS)/ Philippine Date
Accounting Standards (PAS)
any effects of the instrument itself). Profit or loss or change in recognized net assets for this
purpose is as measured in accordance with relevant IFRSs.
In addition to the criteria set out above, the entity must have no other instrument that has terms
equivalent to (d) above and that has the effect of substantially restricting or fixing the residual return to
the holders of the puttable financial instruments.

Additional disclosures are required about the instruments affected by the amendments.

The amendments will apply for annual periods beginning on or after January 1, 2009, with earlier
application permitted. If an entity applies these amendments for a period beginning before January 1,
2009 it shall disclose that fact and apply the related amendments to PAS 39, Financial Instruments:
Recognition and Measurement, PFRS 7 Financial Instruments: Disclosures, and Philippine Interpretation
IFRIC–2, Members’ Shares in Co-operative Entities and Similar Instruments, at the same time.
Amendments to PAS 1: Presentation of 07/01/12 Presentation of Items of Other Comprehensive Income (Amendments to PAS 1) amended paragraphs 7,
Items of Other Comprehensive Income 10, 82, 85-87, 90, 91, 94, 100 and 115, added paragraphs IN17-IN19, 10A, 81A, 81B,
82A and 139J and deleted paragraphs 12, 81, 83 and 84.

An entity shall apply those amendments for annual periods beginning on or after July 1, 2012. Earlier
application is permitted.
PAS 2 Inventories 01/01/05 This Standard prescribes the accounting treatment for inventories. A primary issue in accounting for
inventories is the amount of cost to be recognized as an asset and carried forward until the related
revenues are recognized. This Standard provides guidance on the determination of cost and its
subsequent recognition as an expense, including any write-down to net realizable value. It also provides
guidance on the cost formulas that are used to assign costs to inventories.
PAS 7 Statement of Cash Flows 01/01/05 Information about the cash flows of an entity is useful in providing users of financial statements with a
basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to
utilize those cash flows. The economic decisions that are taken by users require an evaluation of the
ability of an entity to generate cash and cash equivalents and the timing and certainty of their generation.

This Standard requires the provision of information about the historical changes in cash and cash
equivalents of an entity by means of a statement of cash flows which classifies cash flows during the
period from operating, investing and financing activities.
PAS 8 Accounting Policies, Changes in 01/01/05 This Standard prescribes the criteria for selecting and changing accounting policies, together with the
Accounting Estimates and Errors accounting treatments and disclosure of changes in accounting policies, changes in accounting estimates
and correction of errors. The Standard is intended to enhance the relevance and reliability of an entity's
financial statements, and the comparability of those financial statements over time and with the financial
statements over time and with the financial statements of other entities.

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Philippine Financial Reporting Title Effective Brief Description
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Accounting Standards (PAS)
Disclosure requirements for accounting policies, except those for changes in accounting policies, are set out
in PAS 1 Presentation of Financial Statements.

PAS 10 Events after the Balance Sheet Date 01/01/05 This Standard prescribes:

a) when an entity should adjust its financial statements for events after the balance sheet date; and

b) the disclosures that an entity should give about the date when the financial statements were authorized for
issue and about events after the balance sheet date.

The Standard also requires that an entity should not prepare its financial statements on a going concern basis
if events after the balance sheet date indicate that the going concern assumption is not appropriate.

PAS 11 Construction Contracts 01/01/05 This Standard prescribes the accounting treatment of revenue and costs associated with construction
contracts. Because of the nature of the activity undertaken in construction contracts, the date at which the
contract activity is entered into and the date when the activity is completed usually fall into different
accounting periods. Therefore, the primary issue in accounting for construction contracts is the allocation of
contract revenue and contract costs to the accounting periods in which construction work is performed. This
Standard uses the recognition criteria established in the Framework for the Preparation and Presentation of
Financial Statements to determine when contract revenue and contract costs should be recognized as
revenue and expenses in the income statement. It also provides practical guidance on the application of these
criteria.
PAS 12 Income Taxes 01/01/05 This Standard prescribes the accounting treatment for income taxes. The principal issue in accounting for
income taxes is how to account for the current and future tax consequences of:

a) the future recovery (settlement) of the carrying amount of assets (liabilities) that are recognized in an
entity's statement of financial position; and

b) transactions and other events of the current period that are recognized in an entity's financial statements.

It is inherent in the recognition of an asset or liability that the reporting entity expects to recover or settle the
carrying amount of that asset or liability. If it is probable that recovery or settlement of that carrying amount
will make future tax payments larger (smaller) than they would be if such recovery or settlement were to
have no tax consequences, this Standard requires an entity to recognize a deferred tax liability (deferred tax
asset), with certain limited exceptions.

This Standard requires an entity to account for the tax consequences or transactions and other events in the
same way that it accounts for the transactions and other events themselves. Thus, for
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Accounting Standards (PAS)
transactions and other events recognized in profit or loss, any related tax effects are also recognized in profit or
loss. For transactions and other events recognized outside profit or loss (either in other comprehensive income or
directly in equity), any related tax effects are also recognized outside profit or loss (either in other comprehensive
income or directly in equity, respectively). Similarly, the recognition of deferred tax assets and liabilities in a
business combination affects the amount of the bargain purchase gain recognized.

This Standard also deals with the recognition of deferred tax assets arising from unused tax losses or unused tax
credits, the presentation of income taxes in the financial statements and the disclosures of information relating to
income taxes.
Amendment to PAS 12 - Deferred 01/01/12 PAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects
Tax: Recovery of Underlying to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether
Assets recovery will be through use or through sale when the asset is measured using the fair value model in PAS 40,
Investment Property. The amendment provides a practical solution to the problem by introducing a presumption
that recovery of the carrying amount will, normally be, be through sale.

As a result of the amendments, SIC-21 Income Taxes - Recovery of Revalued Non-Depreciable Assets would no
longer apply to investment properties carried at fair value. The amendments also incorporate into PAS 12 the
remaining guidance previously contained in SIC-21, which is accordingly withdrawn.

The amendments are effective from January 1, 2012. Earlier application is permitted.

PAS 16 Property, Plant and 01/01/05 This Standard prescribes the accounting treatment for property, plant and equipment so that users of the financial
Equipment statements can discern information about an entity's investment in its property, plant and equipment and the
changes in such investment. The principal issues in accounting for property, plant and equipment are the
recognition of the assets, the determination of their carrying amounts and the depreciation charges and impairment
losses to be recognized in relation to them.

PAS 17 Leases 01/01/05 This Standard prescribes, for lessees and lessors, the appropriate accounting policies and disclosures to apply in
relation to leases.
PAS 18 Revenue 01/01/05 Income is defined in the Framework for the Preparation and Presentation of Financial Statements as increases in
economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of
liabilities that result in increases in equity, other than those relating to contributions from equity participants.
Income encompasses both revenue and gains. Revenue is income that arises in the course of ordinary activities of
an entity and is referred to by a variety of different names including sales, fees, interest, dividends and royalties.
This Standard prescribes the accounting treatment of revenue arising from certain types of transactions and
events.

The primary issue in accounting for revenue is determining when to recognize revenue. Revenue is

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recognized when it is probable that future economic benefits will flow to the entity and these benefits can be
measured reliably. This Standard identifies the circumstances in which these criteria will be met and, therefore,
revenue will be recognized. It also provides practical guidance on the application of these criteria.

PAS 19 Employee Benefits 01/01/05 This Standard prescribes the accounting and disclosure for employee benefits. It requires an entity to recognize:

a) a liability when an employee has provided service in exchange for employee benefits to be paid in the future;
and

b)an expense when the entity consumes the economic benefit arising from service provided by an employee in
exchange for employee benefits.
Amendments to PAS 19: Actuarial 01/01/06 Amendment to PAS 19, Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures
Gains and Losses, Group Plans and
Disclosures Actuarial gains and losses. The amendment permits an additional option of recognizing actuarial gains and losses
in full in the period in which they occur, outside profit or loss, in a statement of recognized income and expense
(similar to the U.K. requirement). PAS 19 currently requires actuarial gains and losses to be recognized in profit
or loss either (a) immediately in the period in which they occur, or (b) on a deferred basis (i.e., spread forward
over the service lives of the employees, similar to U.S. GAAP).

Group plans. The amendment requires a group entity that participates in a defined benefit plan that shares risks
between entities under common control (i.e., a parent and subsidiaries) to obtain information about the plan as a
whole measured in accordance with PAS 19. If there is a contractual agreement or policy for charging the cost for
the plan as a whole to individual group entities, the group entity, in its separate or individual financial statements,
will recognize the cost so charged. If there is no such agreement or policy, the cost will be recognized in the
separate or individual financial statements of the group entity that is legally the sponsoring employer for the plan.
The other group entities will, in their separate or individual financial statements, recognize a cost equal to their
contribution payable for the period.

Additional disclosures. The amendment requires additional disclosures (a) about trends in the assets and liabilities
in a defined benefit plan and the assumptions underlying the components of the defined benefit cost; and (b) that
bring the disclosures in PAS 19 closer to those required by
U.S. SFAS 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits.

PAS 19 (Amended) Employee Benefits 01/01/13 This Standard prescribes the accounting and disclosure for employee benefits. It requires an entity to recognize:

a) a liability when an employee has provided service in exchange for employee benefits to be paid in the future;
and

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Accounting Standards (PAS)

b)an expense when the entity consumes the economic benefit arising from service provided by an employee in
exchange for employee benefits.

Key changes to this Standard include:

 Removal of corridor approach
 Immediate recognition of past service costs
 Presentation of remeasurements on defined benefit plans in other comprehensive income
 New recognition criteria on termination benefits
 Improved disclosure requirements

The amended standard comes into effect for accounting periods beginning on or after January 1, 2013. Earlier
application is permitted.
PAS 20 Accounting for 01/01/05 This Standard shall be applied in accounting for, and in the disclosure of, government grants and in the disclosure
Government Grants and Disclosure of other forms of government assistance.
of Government Assistance

PAS 21 The Effects of Changes in Foreign 01/01/05 An entity may carry on foreign activities in two ways. It may have transactions in foreign currencies or it may
Exchange Rates have foreign operations. In addition, an entity may present its financial statements in a foreign currency. This
Standard prescribes how to include foreign currency transactions and foreign operations in the financial
statements of an entity and how to translate financial statements into a presentation currency.

The principal issues are which exchange rate(s) to use and how to report the effects of changes in exhange rates in
the financial statements.
Amendment: Net 01/01/06 Net Investment in a Foreign Operation (Amendment to IAS 21), issued in December 2005, added paragraph 15A
Investment in a Foreign Operation and amended paragraph 33.

PAS 23 (Revised) Borrowing Costs 01/01/09 This Standard prescribes that borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset shall form part of the cost of that asset. Other borrowing costs are recognized as
an expense.

The main change from the previous version is the removal of the option of immediately recognizing as an expense
borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. A
qualifying asset is one that takes a substantial period of time to get ready for use or sale. An entity is, therefore,
required to capitalize such borrowing costs as part of the cost of the asset.

The revised Standard does not require the capitalization of borrowing costs relating to assets

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measured at fair value, and inventories that are manufactured or produced in large quantities on a repetitive basis,
even if they take a substantial period of time to get ready for use or sale.

The revised Standard applies to borrowing costs relating to qualifying assets for which the commencement date
for capitalization is on or after January 1, 2009. Earlier application is permitted.

PAS 24 (Revised) Related Party Disclosures 01/01/11 This Standard ensures that an entity's financial statements contain the disclosures necessary to draw attention to
the possibility that its financial position and profit or loss may have been affected by the existence of related
parties and by transactions and outstanding balances with such parties.

The standard was revised in response to concerns that the previous disclosure requirements and the definition of a
‘related party’ were too complex and difficult to apply in practice, especially in environments where government
control is pervasive.

The revised standard addresses these concerns by providing a partial exemption for government- related entities
and by providing by simplifying the definition of a related party and removing inconsistencies.

The revised standard is effective for annual periods beginning on or after January 1, 2011, with earlier
application permitted.
PAS 26 Accounting and Reporting by 01/01/05 This Standard shall be applied in the financial statements of retirement benefit plans where such financial
Retirement Benefit Plans statements are prepared.
PAS 27 (Revised) Consolidated and Separate 07/01/09 This Standard shall be applied in the preparation and presentation of consolidated financial statements for a group
Financial Statements of entities under the control of a parent.

The revised Standard supersedes the existing PAS 27 and is effective July 1, 2009. Entities are permitted to adopt
the revised Standards earlier.
Amendments to PFRS 1 and PAS 01/01/09 The amendments for determining the cost of an investment in the separate financial statements respond to
27: Cost of an Investment in a concerns that retrospectively determining cost and applying the cost method in accordance with PAS 27 on first-
Subsidiary, Jointly Controlled time adoption of PFRSs cannot, in some circumstances, be achieved without undue cost or effort. The
Entity or Associate amendments address that issue:
 by allowing first-time adopters to use a deemed cost of either fair value or the carrying amount under
previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled
entities and associates in the separate financial statements; and
 by removing the definition of the cost method from PAS 27 and replacing it with a requirement to
present dividends as income in the separate financial statements of the investor.
The amendments to PAS 27 also respond to queries regarding the initial measurement of cost in

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the separate financial statements of a new parent formed as the result of a specific type of reorganization. The
amendments require the new parent to measure the cost of its investment in the previous parent at the carrying
amount of its share of the equity items of the previous parent at the date of the reorganization.

PAS 27 (Amended) Separate Financial 01/01/13 This Standard prescribes the accounting and disclosure requirements for investments in subsidiaries, joint
Statements ventures and associates when an entity prepares separate financial statements.

PAS 27 was amended to contain requirements relating only to separate financial statements. The revisions require
the acquirer to expense direct acquisition costs as incurred; to revalue to fair value any pre-existing ownership in
an acquired company at the date on which the Company takes control, and record the resulting gain or loss in net
income; to record in net income adjustments to contingent consideration which occur after completion of the
purchase price allocation; to record directly in equity the effect of transactions after taking control of the acquiree
which increase or decrease the Company’s interest but do not affect control; to revalue upon divesting control any
retained shareholding in the divested company at fair value and record the resulting gain or loss in net income;
and to attribute to non-controlling shareholders their share of any deficit in the equity of a non wholly-owned
subsidiary. The Company is in the process of assessing whether there will be any material changes to its financial
statements upon their adoption.

The amended standard is applicable to annual periods beginning on or after January 1, 2013. Earlier application
is permitted.
PAS 28 Investments in Associates 01/01/05 This Standard shall be applied in accounting for investments in associates. However, it does not apply to
investments in associates held by:

a) venture capital organizations, or

b) mutual funds, unit trusts and similar entities including investment-linked insurance funds

that upon initial recognition are designated as at fair value through profit or loss or are classified as held for
trading and accounted for in accordance with PAS 39 Financial Instruments: Recognition and Measurement. Such
investments shall be measured at fair value in accordance with PAS 39, with changes in fair value recognized in
profit or loss in the period of the change. An entity holding such an investment shall make the disclosures
required by paragraph 37(f).
PAS 28 (Amended) Investments in Associates and Joint 01/01/13 This Standard was amended to incorporate accounting requirements for joint ventures. Once an entity has
Ventures determined that it has an interest in a joint venture, it accounts for the investment using the equity method in
accordance with IAS 28 (amended in 2011).

The amended standard is applicable to annual periods beginning on or after January 1, 2013. Earlier application
is permitted.
PAS 29 Financial Reporting in 01/01/05 This Standard shall be applied to the financial statements, including the consolidated financial
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Hyperinflationary statements, of any entity whose functional currency is the currency of a hyperinflationary economy.
Economies
PAS 31 Interests in Joint Ventures 01/01/05 This Standard shall be applied in accounting for interests in joint ventures and the reporting of joint venture
assets, liabilities, income and expenses in the financial statements of venturers and investors, regardless of the
structures or forms under which the joint venture activities take place.
PAS 32 Financial Instruments: 01/01/05 This Standard establishes principles for presenting financial instruments as liabilities or equity and for offsetting
Disclosure and Presentation financial assets and financial liabilities. It applies to the classification of financial instruments, from the
perspective of the issuer, into financial assets, financial liabilities and equity instruments; the classification of
related interest, dividends, losses and gains; and the circumstances in which financial assets and financial
liabilities should be offset.

The principles in this Standard complement the principles for recognizing and measuring financial assets and
financial liabilities in PAS 39 Financial Instruments: Recognition and Measurement, and for disclosing
information about them in PFRS 7 Financial Instruments: Disclosures.
Amendments to PAS 32 and PAS 01/01/09 PAS 32 requires a financial instrument to be classified as a liability if the holder of that instrument can require the
1: Puttable Financial Instruments issuer to redeem it for cash. This principle works well in most situations. However, many financial instruments
and Obligations Arising on that would usually be considered equity, including some ordinary or common shares and partnership interests,
Liquidation allow the holder to ‘put’ the instrument (to require the issuer to redeem it for cash). Currently these financial
instruments are considered liabilities, rather than equity.

The amendments apply for annual periods beginning on or after January 1, 2009, with earlier application
permitted. If an entity applies these amendments for a period beginning before January 1, 2009 it shall disclose
that fact and apply the related amendments to PAS 39, Financial Instruments: Recognition and Measurement,
PFRS 7 Financial Instruments: Disclosures, and Philippine Interpretation IFRIC–2, Members’ Shares in Co-
operative Entities and Similar Instruments, at the same time.

Amendment to PAS 32: 02/01/10 This amendment to IAS 32, Financial Instruments: Presentation, addresses the accounting for rights issues
Classification of Rights Issues (rights, options or warrants) that are denominated in a currency other than the functional currency of the issuer.
Previously such rights issues were accounted for as derivative liabilities. However, the amendment issued today
requires that, provided certain conditions are met, such rights issues are classified as equity regardless of the
currency in which the exercise price is denominated.

PAS 33 Earnings per Share 01/01/05 This standard prescribes principles for the determination and presentation of earnings per share, so as to improve
performance comparisons between different entities in the same reporting period and between different reporting
periods for the same entity. Even though earnings per share data have limitations because of the different
accounting policies that may be used for determining 'earnings', a consistently determined denominator of the
earnings per share calculation.
PAS 34 Interim Financial Reporting 01/01/05 This Standard prescribes the minimum content of an interim financial report and to prescribe the principles for
recognition and measurement in complete or condensed financial statements for an
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interim period. Timely and reliable interim financial reporting improves the ability of investors, creditors, and
others to understand an entity's capacity to generate earnings and cash flows and its financial condition and
liquidity.
PAS 36 Impairment of Assets 01/01/05 This Standard prescribes the procedures that an entity applies to ensure that its assets are carried at no more than
their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds
the amount to be recovered through use or sale of the asset. If this is the case, the asset is described as impaired
and the Standard requires the entity to recognize an impairment loss. The Standard also specifies when an entity
should reverse an impairment loss and prescribes disclosures.

PAS 37 Provisions, Contingent 01/01/05 This Standard ensures that appropriate recognition criteria and measurement bases are applied to provisions,
Liabilities and Contingent Assets contingent liabilities and contingent assets and that sufficient information is disclosed in the note to enable users
to understand their nature, timing and amount.
PAS 38 Intangible Assets 01/01/05 This Standard prescribes the accounting treatment for intangible assets that are not dealt with specifically in
another Standard. This Standard requires an entity to recognize and intangible asset if, and only if, specified
criteria are met. The Standard also specifies how to measure the carrying amount of intangible assets and requires
specified disclosures about intangible assets.
PAS 39 Financial Instruments: 01/01/05 This Standard establishes principles for recognizing and measuring financial assets, financial liabilities and some
Recognition and contracts to buy or sell non-financial items. Requirements for presenting information about financial instruments
Measurement are in IAS 32 Financial Instruments: Presentation. Requirements for disclosing information about financial
instruments are in IFRS 7 Financial Instruments: Disclosures.

Amendments to PAS 39: 01/01/05 Amendment to PAS 39, Financial Instruments: Recognition and Measurement – Transition and Initial
Transition and Initial Recognition Recognition of Financial Assets and Financial Liabilities.
of Financial Assets and Financial
Liabilities The amendment provides transitional relief from retrospective application of the ‘day 1’ gain and loss recognition
requirements by allowing entities to adopt a transition option that is easier to implement than that in the previous
version of PAS 39. It gives entities a choice of applying the ‘day 1’ gain or loss recognition requirements in PAS
39:

a) retrospectively (as currently required by PAS 39);

b) prospectively to transactions entered into after 25 October 25, 2002; or
c) prospectively to transactions entered into after January 1, 2004.
Amendments to PAS 39: Cash 01/01/06 The amendments allow entities to use hedge accounting for foreign currency risk in a way that matches current
Flow Hedge Accounting of risk management practice.
Forecast Intragroup Transactions

Amendments to PAS 39: The Fair 01/01/06 The use of the fair value option has been limited to those financial instruments that meet certain conditions. The
Value Option conditions that are required to be met under the amendments are: where such designation eliminates or
significantly reduces an accounting mismatch, when a group of

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financial assets, financial liabilities or both are managed and their performance is evaluated on a fair value basis
in accordance with a documented risk management or investment strategy, and when an instrument contains an
embedded derivative that meets particular conditions.
Amendments to PAS 39 and 01/01/06 The amendments are intended to ensure that issuers of financial guarantee contracts include the resulting
PFRS 4: Financial Guarantee liabilities in their balance sheet. Some highlights:
Contracts  A financial guarantee contract is a ‘contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in
accordance with the original or modified terms of a debt instrument’. These contracts could have various
legal forms, including a guarantee, some types of letter of credit, or a credit insurance contract.
 The amendments to IAS 39 require the issuer of a financial guarantee contract to measure the contract
initially at fair value and subsequently at the higher of (a) the amount determined in accordance with IAS
37, Provisions, Contingent Liabilities and Contingent Assets and (b) the amount initially recognized less,
when appropriate, cumulative amortization recognized in accordance with IAS 18, Revenue.
 If an issuer has previously asserted explicitly that it regards such contracts as insurance contracts and has
used accounting applicable to insurance contracts, the issuer may elect to apply to such contracts either
IFRS 4 or the IAS 39 accounting described above.

Amendments to PAS 39 and 07/01/08 The amendments to PAS 39 permit an entity to:
PFRS 7: Reclassification of
 reclassify non-derivative financial assets (other than those designated at fair value through profit or loss
Financial Assets
by the entity upon initial recognition) out of the fair value through profit or loss category if the financial
asset is no longer held for the purpose of selling or repurchasing it in the near term in particular
circumstances.
 transfer from the available-for-sale category to the loans and receivables category a financial asset that
would have met the definition of loans and receivables (if the financial asset had not been designated as
available for sale), if the entity has the intention and ability to hold that financial asset for the foreseeable
future.
For Philippine financial reporting purposes, the amendments to PAS 39 are effective from July 1, 2008. Entities
are not permitted to reclassify financial assets in accordance with the amendments before July 1, 2008. Any
reclassification of a financial asset made in periods beginning on or after November 15, 2008 will take effect only
from the date the reclassification is made.

The amendments to PAS 39 differ from the amendments to IAS 39 which uses a November 1, 2008 “cut-off
date.” Since the FRSC only adopted the amendments on October 29, 2008, the Council decided to change the
“cut-off date” for Philippine financial reporting purposes to November 15, 2008. The November 15, 2008 “cut-off
date” approximates the period between October 13, 2008, the date when IASB amendments were issued, and
November 1, 2008.

Philippine reporting entities should note that use of the November 15, 2008 “cut-off date” would not be in
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Accounting Standards (PAS)
statements in accordance with IFRSs (e.g., for IPO purposes) would have to use the November 1, 2008 “cut-off
date” in the IAS 39 amendments to be in compliance with IFRSs.

Amendments to PAS 39 and 07/01/08 Reclassification of Financial Assets (Amendments to IAS 39 and IFRS 7), issued in October 2008, amended
PFRS 7: Reclassification of paragraphs 50 and AG8, and added paragraphs 50B-50F. An entity shall apply those amendments from 1 July
Financial Assets – Effective Date 2008. An entity shall not reclassify a financial asset in accordance with paragraph 50B, 50D or 50E before 1 July
and Transition 2008. Any reclassification of a financial asset made in periods beginning on or after 1 November 2008 shall take
effect only from the date when the reclassification is made. Any reclassification of a financial asset in accordance
with paragraph 50B, 50D or 50E shall not be applied retrospectively to reporting periods ended before the
effective date set out in this paragraph.
Amendments to Philippine 06/30/09 The reclassification amendment allows entities to reclassify particular financial instruments out of the ‘at fair
Interpretation IFRIC–9 and PAS value through profit or loss’ category in specific circumstances. The amendments to IFRIC 9 and IAS 39 clarify
39: Embedded Derivatives that on reclassification of a financial asset out of the ‘at fair value through profit or loss’ category all embedded
derivatives have to be assessed and, if necessary, separately accounted for in the financial statements.

The amendments set out in Embedded Derivatives apply retrospectively and are required to be applied for annual
periods ending on or after 30 June 2009.
Amendment to PAS 39: 07/01/09 The amendment provides additional guidance on what can be designated as a hedged item.
Eligible Hedged Items
The IASB has therefore focused on developing application guidance to illustrate how the principles underlying
hedge accounting should be applied in those situations.
PAS 40 Investment Property 01/01/05 This Standard prescribes the accounting treatment for investment property and related disclosure requirements.

PAS 41 Agriculture 01/01/05 This Standard prescribes the accounting treatment and disclosures related to agricultural activity.

Philippine Financial Reporting Title Effective Brief Description

Standards (PFRS)/ Philippine Date
Accounting Standards (PAS)
PFRS 1 (Revised) First-time Adoption of 07/01/09 This Standard ensures that an entity's first PFRS financial statements, and its interim financial reports for part of
Philippine Financial the period covered by those financial statements, contain high quality information that:
Reporting Standards
a) is transparent for users and comparable over all periods presented;

b) provides a suitable starting point for accounting in accordance with International Financial Reporting
Standards (IFRSs); and

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Accounting Standards (PAS)

c) can be generated at a cost that does not exceed the benefits.

Amendments to PFRS 1 and PAS 01/01/09 The amendments for determining the cost of an investment in the separate financial statements respond to
27: Cost of an Investment in a concerns that retrospectively determining cost and applying the cost method in accordance with PAS 27 on first-
Subsidiary, Jointly Controlled time adoption of PFRSs cannot, in some circumstances, be achieved without undue cost or effort. The
Entity or Associate amendments address that issue:
 by allowing first-time adopters to use a deemed cost of either fair value or the carrying amount under
previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled
entities and associates in the separate financial statements; and
 by removing the definition of the cost method from PAS 27 and replacing it with a requirement to
present dividends as income in the separate financial statements of the investor.
The amendments to PAS 27 also respond to queries regarding the initial measurement of cost in the separate
financial statements of a new parent formed as the result of a specific type of reorganization. The amendments
require the new parent to measure the cost of its investment in the previous parent at the carrying amount of its
share of the equity items of the previous parent at the date of the reorganization.

PFRS 1(revised) Amendments to 01/01/10 The amendments:

PFRS 1: Additional Exemptions
 exempt entities using the full cost method from retrospective application of IFRSs for oil and gas assets.
for First-time Adopters
 exempt entities with existing leasing contracts from reassessing the classification of those contracts in
accordance with IFRIC 4 Determining whether an Arrangement contains a Lease when the application of
their national accounting requirements produced the same result.

Amendment to PFRS 1: Limited 07/01/10 The amendment relieves first-time adopters of IFRSs from providing the additional disclosures introduced in
Exemption from Comparative Amendments to IFRS 7: Improving Disclosures about Financial Instruments. It thereby ensures that first-time
PFRS 7 adopters benefit from the same transition provisions that Amendments to IFRS 7 provides to current IFRS
Disclosures for First-time Adopters preparers.

Additionally, the amendment to IFRS 1 clarifies the IASB’s conclusions and intended transition for Amendments
to IFRS 7.
Amendments to PFRS 1: Severe 07/01/11 The first amendment replaces references to a fixed date of 1 January 2004 with the date of transition to IFRSs,
Hyperinflation and Removal of thus eliminating the need for companies adopting IFRSs for the first time to restate derecognition transactions that
Fixed Date for First-time Adopters occurred before the date of transition to IFRSs.

The second amendment provides guidance on how an entity should resume presenting financial statements in
accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional
currency was subject to severe hyperinflation.
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Accounting Standards (PAS)

The amendments are effective from July 1, 2011. Earlier application is permitted.
PFRS 2 Share-based Payment 01/01/05 This standard specifies the financial reporting by an entity when it undertakes a share-based payment transaction.
In particular, it requires an entity to reflect in its profit or loss and financial position the effects of share-based
payment transactions, including expenses associated with transactions in which share options are granted to
employees.
Amendments to PFRS 2: Vesting 01/01/09 This provides guidance on the implementation of IFRS 2 on the determination of whether a condition is a vesting
Conditions and Cancellations condition and on the accounting treatment for conditions that are not vesting conditions.

Amendments to PFRS 2: Group 01/01/10 The amendments clarify:

Cash-settled Share- based Payment
Transactions . The scope of PFRS 2. An entity that receives goods or services in a share-based payment arrangement must
account for those goods or services no matter which entity in the group settles the transaction, and regardless of
whether the transaction is equity-settled or cashsettled.

. The interaction of PFRS 2 and other standards. In PFRS 2, a 'group' has the same meaning as in PAS 27,
Consolidated and Separate Financial Statements, that is, it includes only a parent and its subsidiaries.

The amendments to PFRS 2 also incorporate guidance previously included in IFRIC 8, Scope of PFRS 2, and
IFRIC 11, PFRS 2-Group and Treasury Share Transactions. As a result, the IASB has withdrawn IFRIC 8 AND
IFRIC 11. Entities shall apply these amendments to all share-based payments within the scope of PFRS 2 for
annual periods beginning on or after 1 January 2010. Earlier application is permitted.

PFRS 3 (Revised) Business Combinations 07/01/09 This standard improves the relevance, reliability and comparability of the information that a reporting entity
provides in its financial statement about a business combination and its effects. To accomplish that, this PFRS
establishes principles and requirements for how the acquirer:

a)recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and
any non-controlling interest in the acquiree;

b)recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase;
and

c) determines what information to disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination.

The revised Standards supersede the existing PFRS 3 and PAS 27, respectively, effective July 1, 2009. Entities
are permitted to adopt the revised Standards earlier.

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Accounting Standards (PAS)
Business combinations are an important feature of the capital markets. Over the past decade the average annual
value of corporate acquisitions worldwide has been the equivalent of 8-10 per cent of the total market capitalization
of listed securities.

The revised PFRS 3 reinforces the existing PFRS 3 model but remedies problems that have emerged in its
application.
PFRS 4 Insurance Contracts 01/01/05 This Standard specifies the financial reporting for insurance contracts by any entity that issues such contracts
(described in this PFRS as an insurer) until the Board completes the second phase of its project on insurance
contracts. In particular, this PFRS requires:

a) limited improvements to accounting by insurers for insurance contracts; and

b) disclosure that identifies and explains the amounts in an insurer's financial statements arising from insurance
contracts and helps users of those financial statements understand the amount, timing and uncertainty of future cash
flows from insurance contracts.
Amendments to PAS 39 and 01/01/06 The amendments are intended to ensure that issuers of financial guarantee contracts include the resulting liabilities
PFRS 4: Financial Guarantee in their balance sheet. Some highlights:
Contracts  A financial guarantee contract is a ‘contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in
accordance with the original or modified terms of a debt instrument’. These contracts could have various
legal forms, including a guarantee, some types of letter of credit, or a credit insurance contract.
 The amendments to PAS 39 require the issuer of a financial guarantee contract to measure the contract
initially at fair value and subsequently at the higher of (a) the amount determined in accordance with PAS
37, Provisions, Contingent Liabilities and Contingent Assets and (b) the amount initially recognized less,
when appropriate, cumulative amortization recognized in accordance with PAS 18, Revenue.
 If an issuer has previously asserted explicitly that it regards such contracts as insurance contracts and has
used accounting applicable to insurance contracts, the issuer may elect to apply to such contracts either
PFRS 4 or the PAS 39 accounting described above.

PFRS 5 Non-current Assets Held for Sale 01/01/05 This Standard prescribes the accounting for assets held for sale, and the presentation and disclosure of discontinued
and Discontinued Operations operations. In particular, the PFRS requires:

a) assets that meet the criteria to be classified as held for sale to be measured at the lower of carrying amount and
fair value less costs to sell, and depreciation on such assets to cease; and

b) assets that meet the criteria to be classified as held for sale to be presented separately in the statement of financial
position and the results of discontinued operations to be presented separately in the statement of comprehensive
income.
PFRS 6 Exploration for and 01/01/06 The Standard:
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Standards (PFRS)/ Philippine Date
Accounting Standards (PAS)
Evaluation of Mineral  permits an entity to develop an accounting policy for exploration and evaluation assets without specifically
Resources considering the requirements of paragraphs 11 and 12 of PAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors. Thus, an entity adopting PFRS 6 may continue to use the accounting
policies applied immediately before adopting the PFRS. This includes continuing to use recognition and
measurement practices that are part of those accounting policies.
 requires entities recognizing exploration and evaluation assets to perform an impairment test on those
assets when facts and circumstances suggest that the carrying amount of the assets may exceed their
recoverable amount.
 varies the recognition of impairment from that in PAS 36, Impairment of Assets, but measures the
impairment in accordance with that Standard once the impairment is identified.
 requires disclosure of information that identifies and explains the amounts recognized in its financial
statements arising from the exploration for and evaluation of mineral resources, including (a) its
accounting policies for exploration and evaluation expenditures including the recognition of exploration
and evaluation assets, and (b) the amounts of assets, liabilities, income and expense and operating and
investing cash flows arising from the exploration for and evaluation of mineral resources.

PFRS 7 Financial Instruments: 01/01/07 This Standard requires entities to provide disclosures in their financial statements that enable users to evaluate:
Disclosures
a) the significance of financial instruments for the entity's financial position and performance; and

b)the nature and extent of risks arising from financial instruments to which the entity is exposed during the period
and at the end of the reporting period, and how the entity manages those risks.

The principles in this Standard complement the principles for recognizing, measuring and presenting financial
assets and financial liabilities in PAS 32 Financial Instruments: Presentation and PAS 39 Financial Instruments:
Recognition and Measurement.
Amendments to PFRS 7: 01/01/07 PFRS 7 consolidates the existing disclosure requirements of PAS 30, Disclosures in the Financial Statements of
Transition Banks and Similar Financial Institution, and PAS 32, Financial Instruments: Disclosure and Presentation and adds
some significant and challenging new disclosures. Concerns were raised on the requirement to present comparative
information for the disclosures required by PFRS
7. PFRS 7 was approved in December 2005 and is effective for annual periods beginning on or after January 1,
2007. The Council acknowledged that entities may not have sufficient time to gather the required information to be
presented for comparative purposes. New systems and processes to capture the required data particularly for some
of the more complex disclosures may not yet be in place, requiring more time for information gathering.
In response to these concerns, a transition relief was given with respect to the presentation of comparative
information for the new risk disclosures about the nature and extent of risks arising from financial instruments in
paragraphs 31–42 of PFRS 7. Accordingly, an entity that applies PFRS 7

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Accounting Standards (PAS)
for annual periods beginning on or after January 1, 2007 need not present comparative information for the
disclosures required by paragraphs 31-42, unless the disclosure was previously required under PAS 30 or PAS 32.

Amendments to PAS 39 and 07/01/08 The amendments to PAS 39 permit an entity to:
PFRS 7: Reclassification of
 reclassify non-derivative financial assets (other than those designated at fair value through profit or loss by
Financial Assets
the entity upon initial recognition) out of the fair value through profit or loss category if the financial asset
is no longer held for the purpose of selling or repurchasing it in the near term in particular circumstances.
 transfer from the available-for-sale category to the loans and receivables category a financial asset that
would have met the definition of loans and receivables (if the financial asset had not been designated as
available for sale), if the entity has the intention and ability to hold that financial asset for the foreseeable
future.
For Philippine financial reporting purposes, the amendments to PAS 39 are effective from July 1, 2008. Entities are
not permitted to reclassify financial assets in accordance with the amendments before July 1, 2008. Any
reclassification of a financial asset made in periods beginning on or after November 15, 2008 will take effect only
from the date the reclassification is made.

The amendments to PAS 39 differ from the amendments to IAS 39 which uses a November 1, 2008 “cut-off date.”
Since the FRSC only adopted the amendments on October 29, 2008, the Council decided to change the “cut-off
date” for Philippine financial reporting purposes to November 15, 2008. The November 15, 2008 “cut-off date”
approximates the period between October 13, 2008, the date when IASB amendments were issued, and November
1, 2008.

Philippine reporting entities should note that use of the November 15, 2008 “cut-off date” would not be in
accordance with IFRSs. Accordingly, a Philippine entity that will present financial statements in accordance with
IFRSs (e.g., for IPO purposes) would have to use the November 1, 2008 “cut-off date” in the IAS 39 amendments
to be in compliance with IFRSs.
Amendments to PAS 39 and 07/01/08 Reclassification of Financial Assets (Amendments to PAS 39 and IFRS 7), issued in October 2008, amended
PFRS 7: Reclassification of paragraphs 50 and AG8, and added paragraphs 50B-50F. An entity shall apply those amendments from 1 July
Financial Assets - Effective Date 2008. An entity shall not reclassify a financial asset in accordance with paragraph 50B, 50D or 50E before 1 July
and Transition 2008. Any reclassification of a financial asset made in periods beginning on or after 1 November 2008 shall take
effect only from the date when the reclassification is made. Any reclassification of a financial asset in accordance
with paragraph 50B, 50D or 50E shall not be applied retrospectively to reporting periods ended before the effective
date set out in this paragraph.
Amendments to PFRS 7: 01/01/09 The amendments introduce a three-level hierarchy for fair value measurement disclosures and require entities to
Improving Disclosures about provide additional disclosures about the relative reliability of fair value measurements. These disclosures will help
Financial Instruments to improve comparability between entities about the

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Accounting Standards (PAS)
effects of fair value measurements.

In addition, the amendments clarify and enhance the existing requirements for the disclosure of liquidity risk. This
is aimed at ensuring that the information disclosed enables users of an entity’s financial statements to evaluate the
nature and extent of liquidity risk arising from financial instruments and how the entity manages that risk.

The amendments to PFRS 7 apply for annual periods beginning on or after 1 January 2009. However, an entity
will not be required to provide comparative disclosures in the first year of application.

Amendments to PFRS 7: 07/01/11 The amendments allow users of financial statements to improve their understanding of transfer transactions of
Disclosures - Transfers of Financial financial assets (for example, securitizations), including understanding the possible effects of any risks that may
Assets remain with the entity that transferred the assets. The amendments also require additional disclosures if a
disproportionate amount of transfer transactions are undertaken around the end of a reporting period.

PFRS 8 Operating Segments 01/01/09 The Standard requires an entity to adopt the ‘management approach’ to reporting on the financial performance of its
operating segments. Generally, the information to be reported would be what management uses internally for
evaluating segment performance and deciding how to allocate resources to operating segments. Such information
may be different from what is used to prepare the income statement and balance sheet. The Standard therefore
requires explanations of the basis on which the segment information is prepared and reconciliations to the amounts
recognized in the income statement and balance sheet.

PFRS 8 applies to annual financial statements for periods beginning on or after January 1, 2009. The Standard,
which applies to listed companies, replaces PAS 14, Segment Reporting.
PFRS 9 Financial Instruments 01/01/13 The standard introduces new requirements on the classification and measurement of financial assets. It uses a single
approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the many
different rules in PAS 39, Financial Instruments: Recognition and Measurement. The approach in the new standard
is based on how an entity manages its financial instruments (its business model) and the contractual cash flow
characteristics of the financial assets. The new standard also requires a single impairment method to be used,
replacing the many different impairment methods in PAS 39.

The standard is for mandatory adoption by January 1, 2013. Earlier application is permitted for financial
statements beginning on or after January 1, 2010 in the Philippines.
PFRS 10 Consolidated Financial 01/01/13 This Standard is developed to eliminate perceived conflict on concept of consolidation between PAS 27,
Statements Consolidated and Separate Financial Statements (amended in 2008) and SIC-12, Consolidation - Special Purpose
Entities. PAS 27 (amended in 2008) requires consolidation of entities based on control whereas SIC-12 mandates
consolidation of entities based on risks and rewards.

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Accounting Standards (PAS)
The new standard is applicable to annual periods beginning on or after January 1, 2013. Earlier application is
permitted.
PFRS 11 Joint Arrangements 01/01/13 This Standard requires an entity to account joint arrangement based on its rights and obligations arising from the
arrangement rather than based on the structure of the arrangement as required by PAS 31, Interests in Joint
Ventures. The new standard has removed the option to account jointly controlled entities using either proportionate
consolidation or equity method.

The new standard is applicable to annual periods beginning on or after January 1, 2013. Earlier application is
permitted.
PFRS 12 Disclosure of Interests in Other 01/01/13 This Standard prescribes all of the disclosure requirements for subsidiaries, joint arrangements, associates and
Entities unconsolidated structured entities.

The new standard is applicable to annual periods beginning on or after January 1, 2013. Earlier application is
permitted.
PFRS 13 Fair Value Measurement 01/01/13 This Standard was developed to eliminate inconsistencies of fair value measurements dispersed in various existing
PFRSs. It clarifies the definition of fair value, provides a single framework for measuring fair value and enhances
fair value disclosures.

The new standard is applicable to annual periods beginning on or after January 1, 2013. Earlier application is
permitted.

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