PAS 33

Summary
PAS 33 prescribe the principle in computing and presenting earning per share (EPS) to promote
inter- and intra-comparability of performance of entities.
Because of differing accounting policies, PAS33 recognizes that EPS data may have limitations-
particularly on “earnings” which is the numerator in the EPS calculation. Therefore, the focus of
PAS 33 is on the consistent determination of the denominator of the EPS calculations.
PAS 33 requires PUBLICLY LISTED entities, including those in the process of enlisting, to present
EPS information. A publicly listed entities is one whose ordinary shares or potential ordinary
shares are traded in public market (Philippine stock exchange)
Non- Public listed entities are not required to present EPS information. However, if they choose
to do so, they will need to apply PAS 33
If both consolidated and separate financial statement are prepared, EPS is required only for the
consolidated financial statement
Basic Earnings per share = Profit (loss) less Preferred dividends
Weighted average number of outstanding ordinary shares
If preference share are cumulative, only – one-year dividend is deducted, whether declared or not.
If non-cumulative, only the dividends are deducted.
When computing for the weighted average number of outstanding ordinary shares.
a) Ordinary shares issued for cash are averaged from the date cash becomes receivable.
b) Treasury shares are average as a negative value from the acquisition date; or as a positive
value from reissuance date.
c) Share dividends and share splits are averaged retrospectively from the original issuance
date of the related shares on which the share dividends or share splits are based
When stock rights are issued, the weighted average shares before the issue is multiplied by the
following adjustments factor: (FV of stocks right on/ FV of stock ex- right)
FV of stocks ex- right = FV of stocks right- on less value of 1 right

Diluted earing per share = Profit (loss) plus after tax interest expense on convertible bonds

Weighted average number of outstanding ordinary shares plus incremental

Diluted EPS is computed when an entity has potential ordinary shares that are dilutive. Potential
ordinary shares bare dilutive if, when exercised, they decrease basic EPS or increase basic loss per
share.
Diluted EPS is not presented if the effect of the potential ordinary shares is antidilutive.
PAS 34 Interim Financial Reports.
PAS 34 Interim Financial Reporting applies when an entity prepares an interim financial report,
without mandating when an entity should prepare such a report. Permitting less information to be
reported than in annual financial statements (based on providing an update to those financial
statements), the standard outlines the recognition, measurement and disclosure requirements for
interim reports.
The objective of IAS 34 is to prescribe the minimum content of an interim financial report and to
prescribe the principles for recognition and measurement in financial statements presented for an
interim period
A key provision of IAS 34 is that an entity should use the same accounting policy throughout a
single financial year. If a decision is made to change a policy mid-year, the change is
implemented retrospectively, and previously reported interim data is restated
PAS 34, however, encourages publicly listed entities to provide at least a semi- annual financial
report for the first half of the year to be issued not later than 60 days after the end of the interim
period.
PAS 34, however, encourages publicly listed entities to provide at least a semi- annual financial
report for the first half of the year to be issued not later than 60 days after the end of the interim
period.
Interim Financial report – is a financial report prepared for an interim period and contains either
a) A complete set of financial statement as describe in PAS 1 or.
b) A set of condensed financial statement as describe in PAS 34
Periods for which entering financial Statements are presented:
 Semi- annual Interim Financial reporting
 Quarterly interim financial reporting
Materiality
Pas 34 recognizes that interim measurement may rely on estimates to a greater extent than
measurement of annual financial data.
The same accounting policies are use in interim report as those used in annual reports, except for
accounting policy changes made after the date of the most recent annual financial statement that
are to be reflected in the next annual financial statement.
Two view on interim reporting
 Integral view- considered as integral part of the annual accounting period.
 Discrete view- considered as discrete “stand- alone “ accounting period
Measurement
Measurement in the interim period are made on a year- to – date basis, so that the frequency of
reporting (annual, semi – annuals, or quarterly) does not affect the measurement of annual
results.
Revenue that are received seasonally, cyclically, or occasionally are not anticipated or deferred
in the interim period if anticipation or deferral is also not appropriate at the end of the annual
period.
Summary
PAS 36
An asset is impaired if its carrying amount exceeds its recoverable amount. The exceeds its
recoverable amount. The excess represents the impairment loss.
Recoverable amount is the higher of an assets (a) fair value less costs of disposal and its (b) value
in use.
An asset is tested for impairment only when an indication of impairment exists, except for certain
intangible assets that are required to be tested for impairment at least annually.
It is not always necessary to compute both the FVLCD and the VIU. If any one of them exceeds
the carrying amount, the asset is not impaired and the other one need not be computed. If the
FVLCD cannot be determined, the VIU is used as the recoverable amount. If the asset is held for
disposal, its recoverable amount is the FVLCD.
VALUE IN USE is the present value of estimated future cash flows expected to arise from the
continuing use of an asset (CGU)
Impairment loss is recognized in profit or loss, unless it represents a revaluation decrease.
After an impairment, the subsequent depreciation (amortization) for the asset is based on the
asset’s recoverable amount.
If an asset’s recoverable amount can be determined reliably, it is tested for impairment on its own.
If its recoverable amount cannot be determined reliably, the CGU to which that asset belongs is
the one tested for impairment.
For purposes of impairment, goodwill and corporate assets are allocated to CGU’s
The impairment loss on a CGU IS allocated first to any goodwill in the CGU. The excess is
allocated to the other assets of the CGU pro rata based on their carrying amounts.
The reversal of impairment loss shall not result to a carrying amount in excess of the asset’s would
be carrying amount had no impairment loss been recognized in prior periods.
Impairment loss on goodwill is never reversed.
Summary PAS 37
Pas 37 applies to accounting for Provisions, Contingent Liabilities and Contingent Assets except
arising from executory contracts unless they are onerous and those that are covered by other PFRS.
• executory contracts
• Onerous – burdensome.
Provision is a liability of uncertain timing or amount. It is presented in the statement of financial
position separately from other types of liabilities. Past event can create 2 types of obligation: Legal
obligation, Constructive obligation
The standard IAS sets 3 criteria for recognizing a provision:
• There must be a present obligation as a result of a past event;
• The outflow of economic benefits to satisfy the obligation must be probable (i.e. more
than 50% probable)
• The amount of economic benefits required to satisfy the obligation must be reliably
estimated.
The amount of the provision should be measured at the best estimate of the expenditures required
to satisfy the obligation at the end of the reporting period. As you can see, here’s some judgement
and estimates involved. Management should really incorporate all available information in their
estimates and they must not forget about:
• Risks and uncertainties (like inflation),
• Time value of money (discounting when the settlement is expected in the long-term future)
• Some probable future events, etc.
A contingent asset is a possible asset arising from past events that will be confirmed by some
future events not fully under the entity’s control.
A contingent asset is a possible asset arising from past events that will be confirmed by some
future events not fully under the entity’s control.
a) For each class of provision, an entity shall disclose:
• (i) the carrying amount at the beginning and end of the period; (ii) additional provisions
made in the period, including increases to existing provisions; (iii) amounts used (i.e.
incurred and charged against the provision) during the period; (iv) unused amounts
reversed during the period; and (v) the increase during the period in the discounted amount
arising from the passage of time and the effect of any change in the discount rate.
• (b) Comparative information is not required.
An entity shall disclose the following for each class of provision:
• 1. nature of the obligation
• 2.the expected timing of any resulting outflows of economic benefits;
• 3. an indication of the uncertainties about the amount or timing of those outflows.
• 4.major assumptions made concerning future events; and
• 5.the amount of any expected reimbursement, stating the amount of any asset that has been
recognized
Summary:
PAS 38 applies to all intangible asset except those that are specifically dealt with other standard.
For example, PAS 38 does not apply to good will acquired in a business combination (PFRS 3),
intangible asset held as inventory (PAS 2), and intangible asset classified as held for sale.
Intangible assets are identifiable non-monetary asset without physical substance.
An intangible asset is recognized when meets the definition of an intangible asset as well as the
asset recognition criteria of “ probable future economic benefit “ and” reliable measurement of
cost.
Essential elements
(1) Identifiability (Separable or arises from contractual or other legal rights);
(2) Control; and (3) Future economic benefits.
Intangible asset are initially measured at cost. The measurement of cost depends on the intangible
asset’s mode of acquisition.
Internal generation:
1. Research cost – recognized as expense.
2. Development cost – capitalized only if all of the conditions listed in PAS 38 are met.
If it is not clear whether an expenditure is a research or a development cost, it is treated as a
research cost.
Reinstatement of cost already expense is prohibited .
Internally generated brands, mastheads, publishing titles, customer lists, goodwill and similar
items are not recognized as intangible assets.
Subsequent expenditures on recognized intangible asset are generally expense, unless they meet
the definition of an intangible asset and the recognition criteria
Intangible asset are subsequently measured using the cost model or the revaluation mode. The
revaluation model is applicable only when the intangible asset has an active market.
Amortization:
Indefinite useful life - not amortized but tested for impairment at least annually using PAS 36.
Finite useful life – amortized using straight line method (unless another method better reflects the
consumption of the economic benefits from the asset) over the shorter of the asset’s useful life and
legal life, if any. The residual value is assumed to be zero, unless the entity has the ability to sell
the asset at the end of its useful life.
Summary PAS 40
PAS 40 prescribed the accounting and disclosure requirements for investment property.
Investment property – is land or building held to earn rentals or for capital appreciation or both.
Meaning it generates its own cash flow independently from other asset of an entity and is not:
Owner occupied property (Classified as PPE)
Held for sale in ordinary course of business (classified as inventory)
Classified as held for sale under PFRS 5 ; Non- current assets held for sale and discontinued
operations
The portion that is partially being rented out and partly owner occupied are accounted separately
if the portion can be sold separately (or leased out separately under a finance lease). If not the
entire property is classified as either investment property or PPE, whichever portion is more
significant.
If ancillary service provide to occupants is insignificant, the property is classified as Investment
Property.
A property that is leased between members of a gropu is classified as PPE in the group’s
consolidated Financial statements.
Investment property is initially measured at cost. Subsequently measured using either the cost
model or the fair value model.
An investment property is measured under the cost model accounted for using PAS 16 (PPE)
An investment property that is measured under the fair value model is remeasured to fair value at
the end of each reporting period. Changes in fair value are recognized in profit/loss. Investment
property ids not depreciated.
Regardless of which models used, an entity is required to determine the fair value of an investment
property.
Transfer to or from investment property are made only when there is a change in use
When an investment property is derecognized (e.g. disposed of), the difference between the
carrying amount and the net disposal proceeds, if any, is recognized as gain or loss in profit or loss
(unless PFRS 16 requires otherwise on a sale and leaseback)
Disclosure:
Whether the entity uses the fair value model or the cost model.
When the classification is difficult, the criteria used to distinguish investment property from PPE
and inventory.
The existence and amounts of restrictions on investment property
Contractual obligations to purchase, construct or develop investment property or for repairs,
maintenance or enhancements.
The amounts recognized in profit or loss for rental income and related expense.
Summary
PAS 41
Agriculture means farming or the process of production crops and raising livestock. PAS 41
prescribes the accounting and disclosures for agricultural and related activity.
PAS 41 applies to the following when they relate to agricultural activity:
a. Biological Assets, except bearer plants;
b. Agricultural produce at the point of harvest; and
c. Unconditional government grants related to a biological asset measured at its fair value
less costs to sell.
PAS 41 does not apply;
a. Land related to agricultural activity (PAS16 and PAS 40)
b. Bearer plants (PAS 16). However, PAS 41 applies to the produce on those bearer plants.
c. Government grants related to a bearer plants (PAS 20)
d. Intangible assets related to agricultural activity (PAS 38)
PAS 41 applies to agricultural produce only at the point of harvest. After harvest, PAS 2
inventories or other applicable standard is applied.
BIOlOGICAL ASSETS – is a living animal or plant
Harvesting from unmanaged sources is not agricultural activity.
Biological asset is initially measured at Fair Value less cost to sell.
Agricultural produce is initially measured at fair value less cost to sell at the point of harvest and
subsequently measured under PAS 2 inventories or another applicable standard.
Gains and losses arising from the initial measurement of biological asset or agricultural produce
and from the subsequent changes in fair value less cost to sell of biological asset are recognized in
Profit/loss.
Biological asset whose fair value cannot be reliably determined on initial recognition are initially
measured at cost and subsequently measured at cost less accumulated depreciation and
accumulated impairment loss.