Sun and Earth Corporation: Notes To The Financial Statements-Amended

SUN AND EARTH CORPORATION
NOTES TO THE FINANCIAL STATEMENTS-AMENDED

December 31, 2019 and 2018
1. CORPORATE INFORMATION
Sun and Earth Corporation (the “Company”) was incorporated under the laws of the
Philippines and registered with the Securities and Exchange Commission (SEC) on April 6, 1990
with SEC registration number 0000175898. The primary purpose of the Company is to engage in
the business of acquiring, owning, developing, constructing, subdividing, leasing, operating,
maintaining, buying, and selling real estate properties, subdivisions, buildings, condominiums,
industrial estates, warehouses, piers, wharves, transport stations, supermarkets, factories, wet and
dry markets, recreational facilities, store and residential houses and other structures of whatever
kind, together with their appurtenances.
The Company is 100% owned by Filipinos who are residents of the Philippines.
Its registered address is located at 310 Midtown Executive Homes, U.N. Avenue, Paco, Manila
with TIN no. 004-564-684-000.
2. BASIS OF PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS
The amended financial statements of the Company have been prepared on under cost and are
presented in Philippine Peso, which is the Company’s functional and presentation currency. All
values represent absolute amounts except when otherwise indicated.
The accompanying amended financial statements have been prepared on a going concern basis
which contemplates the realization of assets and settlement of liabilities in the normal course of
business.
The amended financial statements have been prepared in compliance with the appropriate
Financial Reporting Framework in conformity with the Philippine Financial Reporting Standard
(PFRS) issued by the Philippine Financial Reporting Standards Council. PFRS are based on
International Financial Reporting Standards (IFRSs) issued by the International Accounting
Standards Board (IASB). PFRS consist of PFRSs, Philippine Accounting Standards (PASs), and
Philippine Interpretations issued by the Financial Reporting Standards Council (FRSC).
Moreover, Republic Act No. 11232 or the Act Providing for the Revised Corporation Code (“the
Revised Code”) which took effect on February 23, 2019 have been applied in preparing these
financial statements. The Company adopted “the Revised Code” and the extent of the impact has
been determined. None of these is expected to have a significant effect on the financial statements
of the Company which was adopted for the Company’s calendar year 2019 financial statements.
SUN AND EARTH CORPORATION Page 1 of 56

3. SUMMARY OF NEW AND REVISED ACCOUNTING STANDARDS (PFRS)
Changes in Accounting Policies and Disclosures ( Adoption of New or Revised Standards and
Amendments to Standards and Interpretations)
(Effective for annual periods beginning on or after January 1, 2019)
PFRS 16: Leases PFRS 16 specifies how an PFRS reporter will recognize, measure,
present and disclose leases. The standard provides a single lessee
accounting model, requiring lessees to recognize assets and liabilities
for all leases unless the lease term is 12 months or less or the
underlying asset has a low value. Lessors continue to classify leases as
operating or finance, with PFRS 16’s approach to lessor accounting
substantially unchanged from its predecessor, PAS 17.
IFRIC 23: The interpretation addresses the determination of taxable profit (tax
Uncertainty loss), tax bases, unused tax losses, unused tax credits and tax rates,
over Income when there is uncertainty over income tax treatments under PAS 12. It
Tax Treatments specifically considers:
 Whether tax treatments should be considered collectively
 Assumptions for taxation authorities' examinations
 The determination of taxable profit (tax loss), tax bases, unused
tax losses, unused tax credits and tax rates
 The effect of changes in facts and circumstances
Amendments to Prepayment Features with Negative Compensation

PFRS 9 Amends the existing requirements in PFRS 9 regarding termination
rights in order to allow measurement at amortized cost (or, depending
on the business model, at fair value through other comprehensive
income) even in the case of negative compensation payments.
.
Amendments to Long-term Interest in Associates and Joint Ventures
PAS 28 Clarifies that the Company applies PFRS 9 Financial Instruments to
long-term interests in an associate or joint venture that form part of
the net investment in the associate or joint venture but to which the
equity method is not applied.
Annual Makes amendments to the following standards:

Improvements  PFRS 3 and PFRS 11 - The amendments to IFRS 3 clarify that
to PFRS when the Company obtains control of a business that is a joint
Standards operation, it remeasures previously held interests in that business.
2015–2017  The amendments to PFRS 11 clarify that when the Company
Cycle obtains joint control of a business that is a joint operation, the
Company does not remeasure previously held interests in that
business.
 PAS 12 - The amendments clarify that all income tax
consequences of dividends (i.e. distribution of profits) should be
recognized in profit or loss, regardless of how the tax arises.
 PAS 23 - The amendments clarify that if any specific borrowing
remains outstanding after the related asset is ready for its
intended use or sale, that borrowing becomes part of the funds
that an Company borrows generally when calculating the
capitalization rate on general borrowings.
Plan The amendments in Plan Amendment, Curtailment or Settlement
Amendment, (Amendments to PAS 19) are:
Curtailment or If a plan amendment, curtailment or settlement occurs, it is now
Settlement mandatory that the current service cost and the net interest for the
(Amendments period after the remeasurement are determined using the assumptions
to PAS 19) used for the remeasurement. In addition, amendments have been
included to clarify the effect of a plan amendment, curtailment or
settlement on the requirements regarding the asset ceiling
Changes in Accounting Policies and Disclosures (New or Revised Standards and Amendments
to Standards and Interpretations Not Yet Adopted)
IAS 1 Classification of liabilities

An Exposure Draft (DP)proposing amendments related to how to
classify debt when there is a right to renew the debt was published in
February 2015. The IASB is currently reviewing the comments
received.
Primary financial statements

The IASB is exploring potential changes to the structure and content
of the primary financial statements, with a focus on the statement(s)
of financial performance. A DP or ED is expected in the second half
of 2019.
IAS 8 Accounting policies and accounting estimates

In September 2017 the IASB proposed amendments to IAS 8 to the
definitions of an accounting policy and an accounting estimate. The
IASB is considering the comments received and expects to decide
the project direction in the second quarter of 2019.
Accounting policy changes

The IASB has proposed changes that would result in more voluntary
changes in accounting policies that respond to agenda decisions
made by the IFRS Interpretations Committee being accounted for
prospectively. An ED was issued in 2018 and the IASB is
considering the comments received.
IAS 12 Deferred tax related to assets and liabilities arising from a single
transaction
In 2018, the IASB decided to propose a narrow-scope amendment
that would narrow the initial recognition exemption in IAS 12 so that
it would not apply to transactions that give rise to both taxable and
deductible temporary differences, to the extent the amounts
recognized for the temporary differences are the same. An ED is
expected in the first half of 2019.
IAS 16 Proceeds before intended use

An ED proposing that proceeds from testing an asset be recognized
as revenue was published in June 2017. The IASB has reviewed the
comments received on the ED and is now planning to finalize the
amendments.

IAS 19 Pension benefits that depend on asset returns
The IASB is gathering evidence to help decide whether to develop
proposals to make a narrow-scope amendment to IAS 19 for pension
benefits that depend on asset returns.
To gather evidence for this research project, the IASB is planning to

conduct outreach activities during the first half of 2019.
IAS 28 Equity method

This project is in the research pipeline. The IASB plans no further
work until the PIR of IFRS 11 is undertaken.
IAS 29 Scope
This project is in the research pipeline. If the research establishes
that it would not be feasible to extend the scope of IAS 29 in this
way, the IASB expects to recommend no work on IAS 29.
IAS 32 Financial instruments with characteristics of equity

The IASB is exploring whether it can improve the existing
requirements in IAS 32 for classifying financial instruments that
have characteristics of both a liability and equity. A DP was
published in 2018, with a six-month comment period.
IAS 36 Goodwill and impairment

The IASB is exploring whether the existing impairment test for
goodwill can be improved or simplified. The IASB plans to publish
a DP or an ED in the second half of 2019.
IAS 37 Provisions
The IASB has recommenced work on a project to review the
implications of the new Conceptual Framework on the accounting
for provisions. The IASB is currently reviewing the research.
Onerous contracts
The IASB proposed to clarify the onerous contract requirements in
an ED issued in 2018.
Pollutant pricing mechanisms

This project is in the research pipeline.
IAS 39 Dynamic risk management

The IASB is assessing how to replace the remaining sections of IAS
39, that deal with macro-hedging. A DP was issued in 2014. The
IASB expects to have developed a core model sometime in the first
half of 2019.
IAS 41 Cash flows from taxation

A proposal to remove the requirement to exclude cash flows from
taxation when measuring fair value of agricultural assets will be
included in the next Annual Improvements ED.
IFRS 1 Adoption by a subsidiary

A proposal to amend IFRS 1 to require a subsidiary that applies

IFRS 1 to measure its cumulative translation differences using the
amounts reported by its parent. This amendment will be included in
the next Annual Improvements ED.
IFRS 3 Intangible assets, goodwill and impairment

The IASB is exploring whether the initial measurement of intangible
assets, and therefore goodwill, can be improved or simplified. A DP
or ED is expected in the second half of 2019.
Business combinations under common control

The IASB is examining how companies should account for
combinations of businesses under common control, which are
currently outside the scope of IFRS 3. A DP is expected in 2020.
Updating a Reference to the Conceptual Framework

The IASB is developing proposals to update a reference to the
Conceptual Framework in IFRS 3 in a way that avoid conflicts with
other IFRS Standards.
IFRS 5 Post-implementation review

In 2018 the IASB decided to undertake a post-implementation
review of IFRS 5 in 2019 or 2020.
IFRS 6 Extractive activities

In 2018 the IASB started a project to replace IFRS 6.
IFRS 8 Post-implementation Review

Having completed the review, a Feedback Statement is expected to
be published in February 2019.
IFRS 9 Dynamic risk management

The IASB is assessing how to replace the remaining sections of IAS
39 that deal with macro-hedging. A DP was issued in 2014. The
IASB expects to have developed a core model in the second half of
2019.
10 percent test
A proposal to clarify which fees and costs are included in the
quantitative ‘10 percent’ test for assessing whether to derecognize a
financial liability is expected to be included in the next Annual
Improvements ED.
IFRS 10, 11, and 12 Post-implementation review

The IASB will undertake a post-implementation review of IFRS 10,
11 and 12.
IFRS 14 Rate-regulated Activities

IFRS 14 is a temporary Standard. The IASB has been considering
whether entities that operate in rate-regulated environments should
recognize assets and liabilities arising from the effects of rate
regulation. A DP was published in 2014. A second DP or an ED is
expected in the second half of 2019.

IFRS 16 IFRS 16
A proposal to amend Example 13 of the illustrative examples
accompanying IFRS 16 is expected to be included in the next
Annual Improvements ED.
IFRS 17 Stakeholder concerns and implementation challenges

The IASB is discussing stakeholder concerns and implementation
challenges raised since IFRS 17 was issued and is considering
whether there is a need to amend the Standard. This includes the
effective date of the Standard. An ED is expected in 2019.
IFRIC 14 Availability of a refund

An ED was published in June 2015 to clarify the accounting when
other parties have rights to make particular decisions about a
company's defined benefit plan. The IASB is undertaking additional
analysis before deciding what steps to take next.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set
out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
Cash
Cash includes cash in bank which are unrestricted and available for current operations. This is
measured in the statement of financial position at face amount.
Trade and other receivables

Trade receivable represents accounts receivable while other receivables pertain to advances to
officers and employees. Trade and other receivables are recognized as financial assets when the
Company becomes a party to the contract and, as a consequence, has a legal right to receive cash.
Financial assets to be acquired as a result of a firm commitment to sell goods or services are
generally not recognized until at least one of the parties has performed under the agreement.
Trade and other receivables are initially measured at their transaction price (i.e. the fair value of
the consideration given or received, and subsequently measured at amortized cost.
A receivable is Company’s right to consideration that is unconditional. A right to consideration is

unconditional if only the passage of time is required before payment of that consideration is due.
(i.e. Company would recognize a receivable if it has a present right to payment even though that
amount may be subject to refund in the future. Upon initial recognition of a receivable from a
contract with a customer, any difference between the measurement of the receivable and the
corresponding amount of revenue recognized shall be presented as an expense (i.e. as an
impairment loss).
For the purpose of determining the transaction price, the Company shall assume that the goods or
services will be transferred to the customer as promised in accordance with the existing contract
and that the contract will not be cancelled, renewed or modified.
Fair value is the price that would be received to sell an asset in an orderly transaction between
market participants at the measurement date.

Amortized cost is the amount at which the financial asset is measured at initial recognition minus
the principal collections repayments, and adjusted for any loss allowance.
The Company may use practical expedients when measuring expected credit losses. A practical
expedient is the calculation of the expected credit losses on trade receivables using a provision
matrix. The Company would use its historical credit loss experience for trade receivables to
estimate the 12-month expected credit losses or the lifetime expected credit losses on the financial
assets as relevant. A provision matrix might, specify fixed provision rates depending on the
number of days that a trade receivable is past due. Depending on the diversity of its customer
base, the Company would use appropriate groupings if its historical credit loss experience shows
significantly different loss patterns for different customer segments.
Inventories
The Company shall measure inventories at the lower of cost and net realizable value.
The cost of inventories shall comprise all costs of purchase, and other costs incurred in bringing
the inventories to their present location and condition.
The costs of purchase of inventories comprise the purchase price, and other taxes (other than
those subsequently recoverable by the Company from the taxing authorities), and transport,
handling and other costs directly attributable to the acquisition of finished goods, materials and
services. Trade discounts, rebates and other similar items are deducted in determining the costs of
purchase.
Other costs are included in the cost of inventories only to the extent that they are incurred in
bringing the inventories to their present location and condition.
NRV is the estimated selling price in the ordinary course of the business less the estimated costs
necessary to make the sale.
The cost of inventories may not be recoverable if those inventories are damaged, if they have
become wholly or partially obsolete, or if their selling prices have declined. The cost of
inventories may also not be recoverable if the estimated costs of completion or the estimated costs
to be incurred to make the sale have increased. The practice of writing inventories down below
cost to net realizable value is consistent with the view that assets should not be carried in excess
of amounts expected to be realized from their sale or use.
Other current assets

Other current assets consist of creditable withholding income tax, input tax and deferred input
tax. Other current assets are measured at transaction cost.
Property and equipment-net

Property, plant and equipment are initially measured at its cost and subsequently measured at cost
less any accumulated depreciation and any accumulated impairment losses.
The cost of an item of property, plant and equipment may comprise:

a) its purchase price, including import duties and non-refundable purchase taxes, after deducting
trade discounts and rebates.
b) any costs directly attributable to bringing the asset to the location and condition necessary for
it to be capable of operating in the manner intended by management.
c) the initial estimate of the costs of dismantling and removing the item and restoring the site on
which it is located, the obligation for which an Company incurs either when the item is

acquired or as a consequence of having used the item during a particular period for purposes
other than to produce inventories during that period.
The cost of an item of property, plant and equipment is the cash price equivalent at the recognition
date. If payment is deferred beyond normal credit terms, the difference between the cash price
equivalent and the total payment is recognized as interest over the period of credit unless such
interest is capitalized.
Recognition of costs in the carrying amount of an item of property, plant and equipment ceases
when the item is in the location and condition necessary for it to be capable of operating in the
manner intended by management. The cost of an item of property, plant and equipment is the cash
price equivalent at the recognition date. If payment is deferred beyond normal credit terms, the
difference between the cash price equivalent and the total payment is recognized as interest over
the period of credit unless such interest is capitalized.
The depreciable amount of an asset shall be allocated on a systematic basis over its useful life.
The residual value and the useful life of an asset shall be reviewed at least at each financial year-
end and, if expectations differ from previous estimates, the change(s) shall be accounted for as a
change in an accounting estimate.
Depreciation of an asset begins when it is available for use, ie when it is in the location and
condition necessary for it to be capable of operating in the manner intended by management.
Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale
(or included in a disposal group that is classified as held for sale) and the date that the asset is
derecognized. Therefore, depreciation does not cease when the asset becomes idle or is retired
from active use unless the asset is fully depreciated. However, under usage methods of
depreciation the depreciation charge can be zero while there is no production.
The carrying amount of an item of property, plant and equipment shall be derecognized:
a) on disposal; or
b) when no future economic benefits are expected from its use or disposal.
The gain or loss arising from the derecognition of an item of property, plant and equipment shall
be included in profit or loss when the item is derecognized. Gains shall not be classified as
revenue
If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying
amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment
loss.
Investment
Investment pertains to equity instrument, initially measured at their transaction price (i.e. the fair
value of the consideration paid) which is normally the cost of the shares acquired, plus or minus,
transaction costs that are directly attributable to the acquisition of financial asset, and
subsequently measured at cost whose fair value cannot be reliably measured.
All investments in equity instruments and contracts on those instruments must be measured at fair
value. However, in limited circumstances, cost may be an appropriate estimate of fair value. That
may be the case if insufficient more recent information is available to measure fair value, or if
there is a wide range of possible fair value measurements and cost represents the best estimate of
fair value within that range.
If the Company previously accounted at cost, for an investment in an equity instrument that does
not have a quoted price in an active market for an identical instrument, it shall measure that

instrument at fair value at the date of initial application. Any difference between the previous
carrying amount and the fair value shall be recognized in the opening retained earnings (or other
component of equity, as appropriate) of the reporting period that includes the date of initial
application.
Deferred tax asset

Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of:
a) deductible temporary differences;
b) the carryforward of unused tax losses; and
c) the carryforward of unused tax credits.
Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and deferred tax assets shall reflect the tax
consequences that would follow from the manner in which the Company expects, at the end of
the reporting period, to recover or settle the carrying amount of its assets and liabilities.
The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period.
The Company shall reduce the carrying amount of a deferred tax asset to the extent that it is no
longer probable that sufficient taxable profit will be available to allow the benefit of part or all of
that deferred tax asset to be utilized. Any such reduction shall be reversed to the extent that it
becomes probable that sufficient taxable profit will be available.
The Company shall offset deferred tax assets and deferred tax liabilities if, and only if:
a) the Company has a legally enforceable right to set off current tax assets against current tax
liabilities; and
b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the
same taxation authority on either:
 the same taxable Company; or
 different taxable entities which intend either to settle current tax liabilities and assets on
a net basis, or to realize the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax liabilities or assets are expected to be
settled or recovered.
Trade payables
Trade payables pertain to accounts payable. Trade payables are recognized as financial liabilities
when the Company becomes a party to the contract and, as a consequence, has a legal obligation
to pay cash. Financial liabilities to be incurred as a result of a firm commitment to purchase are
generally not recognized until at least one of the parties has performed under the agreement.
Trade payables are initially measured at their transaction price (i.e. the fair value of the
consideration given or received, and subsequently measured at amortized cost.
If consideration payable to a customer is a payment for a distinct good or service from the
customer, then the Company shall account for the purchase of the good or service in the same
way that it accounts for other purchases from suppliers. If the amount of consideration payable to
the customer exceeds the fair value of the distinct good or service that the Company receives
from the customer, then the Company shall account for such an excess as a reduction of the
transaction price. If the Company cannot reasonably estimate the fair value of the good or service
received from the customer, it shall account for all of the consideration payable to the customer as
a reduction of the transaction price.

Fair value is the price that would be paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
Amortized cost is the amount at which the financial liability is measured at initial recognition
minus the principal repayments.
Income tax payable

Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit
(tax loss) for a period.
The tax currently payable for the year is based on regular corporate income tax (RCIT). Taxable
profit differs from the net profit as reported in the statement of income because it excludes items
of income or expense that are taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The reconciliation of the company’s liabilities for the current
tax is calculated at 30% tax rate.
Current tax for current and prior periods shall, to the extent unpaid, be recognized as a liability. If
the amount already paid in respect of current and prior periods exceeds the amount due for those
periods, the excess shall be recognized as an asset.
The benefit relating to a tax loss that can be carried back to recover current tax of a previous
period shall be recognized as an asset.
When a tax loss is used to recover current tax of a previous period, the Company recognizes the
benefit as an asset in the period in which the tax loss occurs because it is probable that the benefit
will flow to the Company and the benefit can be reliably measured.
Current tax liabilities (assets) for the current and prior periods shall be measured at the amount
expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the reporting period.
The Company shall offset current tax assets and current tax liabilities if, and only if, the
Company:
a) has a legally enforceable right to set off the recognized amounts; and
b) intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously.
Loans payable
Loans payable pertains to an interest-bearing loan obtained from a financial institution intended
for funding the company’s operations as authorized and approved by the board of directors during
special meeting. Loans payable is a financial liability representing a contractual obligation to
deliver cash in the future and in each case, one party’s obligation to pay cash is matched by the
other party’s corresponding right to receive.
A contractual obligation to deliver financial instruments is itself a financial instrument. A chain of

contractual obligations meets the definition of a financial instrument if it will ultimately lead to
payment of cash .

Loans payable is initially measured at fair value which is the present value of cash payable to the
bank (including interest payments and repayment of principal) plus or minus, transaction costs
that are directly attributable to the issue of the financial liability, and subsequently measured at
amortized cost, using effective interest method without regard to the Company’s intention to hold
them to maturity.
Transaction costs include fees and commission paid to agents (including employees acting as
selling agents), advisers, brokers and dealers, levies by regulatory agencies and security
exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or
discounts, financing costs or internal administrative or holding costs.
Effective interest method is a method that is used in the calculation of the amortized cost of a
financial asset or a financial liability and in the allocation and recognition of the interest revenue
or interest expense in profit or loss over the relevant period.
In applying the effective interest method, the Company identifies fees that are an integral part of
the effective interest rate of a financial instrument. The description of fees for financial services
may not be indicative of the nature and substance of the services provided. Fees that are an
integral part of the effective interest rate of a financial instrument are treated as an adjustment to
the effective interest rate, unless the financial instrument is measured at fair value, with the
change in fair value being recognized in profit or loss. In those cases, the fees are recognized as
revenue or expense when the instrument is initially recognized.
Other current liabilities

Other current liabilities include payable for government contributions such as VAT output tax
payable and withholding tax payable for Bureau of Internal revenue (BIR). These are measured at
their transaction cost.
Due to stockholders
Due to stockholders represent advances obtained from stockholders intended for additional funds
for working capital requirements as authorized and approved by the board of directors during
special meeting. Due to stockholders are financial liability representing a contractual obligation to
deliver cash in the future and in each case, one party’s obligation to pay cash is matched by the
other party’s corresponding right to receive.
A contractual obligation to deliver financial instruments is itself a financial instrument. A chain of

contractual obligations meets the definition of a financial instrument if it will ultimately lead to
payment of cash .
Due to stockholders are non-derivative financial liability with fixed or determinable payments that
are initially measured at their transaction price (i.e. the fair value of the consideration received)
which is normally the amount owed to stockholders, plus or minus, transaction costs that are
directly attributable to issue of the financial liability, and subsequently measured at amortized
cost, without regard to the Company’s intention to hold them to maturity.
Transaction costs include fees and commission paid to agents (including employees acting as
selling agents), advisers, brokers and dealers, levies by regulatory agencies and security
exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or
discounts, financing costs or internal administrative or holding costs.
Amortized cost is the amount at which the financial liability is measured at initial recognition
minus the principal repayments.
Retirement payable

The Company accounts for the post-employment benefit plan using the accrual approach in
accordance with the minimum retirement benefits required under Republic Act (RA) No. 7641,
otherwise known as The Philippine Retirement Pay Law, or company policy if superior than that
provided by RA 7641.
Accrual approach is applied by calculating the expected liability as of reporting date using the
current salary of the entitled employees and the employees’ years of service, without
consideration of future changes in salary rates and service periods. The entity shall recognize the
liability for such post-employment benefit plan at the net total of the following amounts: a) the
accrued amount of the retirement benefits at the reporting date; less b) the fair value of plan assets
(if any) at the reporting date out of which the obligations are to be settled directly.
Share capital
The Company shall classify the instrument, or its component parts, on initial recognition as a
financial liability, a financial asset or an equity instrument in accordance with the substance of the
contractual arrangement and the definitions of a financial liability, a financial asset and an equity
instrument.
When an issuer applies the definitions to determine whether a financial instrument is an equity
instrument rather than a financial liability, the instrument is an equity instrument if, and only if,
both conditions (a) and (b) below are met.
a) The instrument includes no contractual obligation:
 to deliver cash or another financial asset to another Company; or
 to exchange financial assets or financial liabilities with another Company under
conditions that are potentially unfavourable to the issuer.
b) If the instrument will or may be settled in the issuer’s own equity instruments, it is:
 a non-derivative that includes no contractual obligation for the issuer to deliver a
variable number of its own equity instruments; or
 a derivative that will be settled only by the issuer exchanging a fixed amount of cash or
another financial asset for a fixed number of its own equity instruments.
If the Company reacquires its own equity instruments, those instruments (‘treasury shares’) shall
be deducted from equity. No gain or loss shall be recognized in profit or loss on the purchase,
sale, issue or cancellation of the Company’s own equity instruments. Such treasury shares may
be acquired and held by the Company or by other members of the consolidated group.
Consideration paid or received shall be recognized directly in equity.
The Company typically incurs various costs in issuing or acquiring its own equity instruments.
Those costs might include registration and other regulatory fees, amounts paid to legal,
accounting and other professional advisers, printing costs and stamp duties. The transaction costs
of an equity transaction are accounted for as a deduction from equity to the extent they are
incremental costs directly attributable to the equity transaction that otherwise would have been
avoided. The costs of an equity transaction that is abandoned are recognized as an expense.
Cumulative earnings
Cumulative earnings include all current and prior period results as disclosed in the statement of
income.
Distributions to holders of an equity instrument shall be recognized by the Company directly in

equity. Transaction costs of an equity transaction shall be accounted for as a deduction from
equity.
When the Company pays dividends to its shareholders, it may be required to pay a portion of the

dividends to taxation authorities on behalf of shareholders. In many jurisdictions, this amount is
referred to as a withholding tax. Such an amount paid or payable to taxation authorities is charged
to equity as a part of the dividends.
As approved and authorized by the Board of Directors, any appropriation of cumulative earnings
(Retained Earnings) be in accordance with the policy set forth in Section 42 of the Revised
Corporation Code, to wit:
The board of directors of a stock corporation may declare dividends out of the unrestricted
retained earnings which shall be payable in cash, property, or in stock to all stockholders on the
basis of outstanding stock held by them: Provided, That any cash dividends due on delinquent
stock shall first be applied to the unpaid balance on the subscription plus costs and expenses,
while stock dividends shall be withheld from the delinquent stockholders until their unpaid
subscription is fully paid: Provided, further, That no stock dividend shall be issued without the
approval of stockholders representing at least two-thirds (2/3) of the outstanding capital stock at a
regular or special meeting duly called for the purpose.
Stock corporations are prohibited from retaining surplus profits in excess of one hundred percent
(100%) of their paid-in capital stock, except:
a) when justified by definite corporate expansion projects or programs approved by the board
of directors; or
b) when the corporation is prohibited under any loan agreement with financial institutions or
creditors, whether local or foreign, from declaring dividends without their consent, and such
consent has not yet been secured; or
c) when it can be clearly shown that such retention is necessary under special circumstances
obtaining in the corporation, such as when there is need for special reserve for probable
contingencies.
Revenue recognition
The Company measures revenue from contracts with customers at the amount of consideration to
which the Company expects to be entitled in exchange for transferring promised goods or
services. The amount of revenue recognized reflects any trade discounts and volume rebates the
Company allows. The Company undertakes, in the course of its ordinary activities, other
transactions that do not generate revenue but are incidental to the main revenue-generating
activities. The Company presents the results of such transactions, when this presentation reflects
the substance of the transaction or other event, by netting any income with related expenses
arising on the same transaction.
In addition, the Company presents on a net basis gains and losses arising from a group of similar
transactions. However, the Company presents such gains and losses separately if they are
material.
The recognition of income occurs at the same time as:

a) the initial recognition of an asset, or an increase in the carrying amount of an asset; or
b) the derecognition of a liability, or a decrease in the carrying amount of a liability.
When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the
amount of the transaction price (which excludes estimates of variable consideration) that is
allocated to that performance obligation.
The transaction price is the amount of consideration to which the Company expects to be entitled
in exchange for transferring promised goods or services to a customer, excluding amounts
collected on behalf of third parties (i.e. some sales taxes). The consideration promised in a

contract with a customer may include fixed amounts, variable amounts, or both.
The following specific recognition criteria must also be met before revenue is recognized:
Sale of goods
The Company principally generates revenue from sale of construction materials that is satisfied
upon the transfer of the goods to the customer, which generally coincides with delivery directly to
customers and acceptance of the goods sold. Revenue is not considered to the extent where there
are significant uncertainties regarding recovery of the consideration due, associated costs or the
possible return of goods.
In addition to items required, the Statement of Income shall include line items that present the
following amounts for the period, presenting separately:
 Rent revenue
Shall recognize lease payments from operating leases as income on either a straight-line basis
or another systematic basis. The lessor shall apply another systematic basis if that basis is
more representative of the pattern in which benefit from the use of the underlying asset is
diminished.
 Interest income
Interest shall be recognized using the effective interest method. Finance income comprises of
interest income on bank deposits. Interest income is recognized in profit or loss as it accrues,
using the effective interest method.
The nature, timing and amount of consideration promised by a customer affect the estimate of the
transaction price. When determining the transaction price, the Company shall consider the effects
of all of the following:
a) variable consideration;
b) constraining estimates of variable consideration;
c) the existence of a significant financing component in the contract;
d) non-cash consideration; and
e) consideration payable to a customer.
The objective when allocating the transaction price is for the Company to allocate the transaction
price to each performance obligation (or distinct good or service) in an amount that depicts the
amount of consideration to which the Company expects to be entitled in exchange for transferring
the promised goods or services to the customer.
To allocate the transaction price to each performance obligation on a relative stand-alone selling
price basis, the Company shall determine the stand-alone selling price at contract inception of the
distinct good or service underlying each performance obligation in the contract and allocate the
transaction price in proportion to those stand-alone selling prices.
The stand-alone selling price is the price at which the Company would sell a promised good or
service separately to a customer. The best evidence of a stand-alone selling price is the observable
price of a good or service when the Company sells that good or service separately in similar
circumstances and to similar customers. A contractually stated price or a list price for a good or
service may be (but shall not be presumed to be) the stand-alone selling price of that good or

service.
After contract inception, the transaction price can change for various reasons, including the
resolution of uncertain events or other changes in circumstances that change the amount of
consideration to which the Company expects to be entitled in exchange for the promised goods or
services.
The Company shall allocate to the performance obligations in the contract any subsequent
changes in the transaction price on the same basis as at contract inception. Consequently, the
Company shall not reallocate the transaction price to reflect changes in stand-alone selling prices
after contract inception. Amounts allocated to a satisfied performance obligation shall be
recognized as revenue, or as a reduction of revenue, in the period in which the transaction price
changes.
Cost and expense recognition

Expenses are decreases in assets, or increases in liabilities, that result in decreases in equity, other
than those relating to distributions to holders of equity claims.
The Company shall present an analysis of expenses recognized in profit or loss using a
classification based on either their nature or their function within the Company, whichever
provides information that is reliable and more relevant.
Expenses are subclassified to highlight components of financial performance that may differ in
terms of frequency, potential for gain or loss and predictability. This analysis is provided in one of
two forms which is the “function of expense”. At a minimum, the Company discloses its cost of
sales under this method separately from other expenses. This method can provide more relevant
information to users than the classification of expenses by nature, but allocating costs to functions
may require arbitrary allocations and involve considerable judgement.
The recognition of expenses occurs at the same time as:

a) the initial recognition of a liability, or an increase in the carrying amount of a liability; or
b) the derecognition of an asset, or a decrease in the carrying amount of an asset.
 Direct costs
Direct costs are recognized in profit or loss in the period the services are provided. Costs of
services include materials used for construction, direct labor, overhead and other expenses
directly related in performing services.
 General and administrative expenses

General and administrative expenses include depreciation, repairs and maintenance, salaries
and wages, commission, and other costs that cannot be associated directly to the cost of sales.
 Finance cost pertains to interest expense on borrowings and other bank charges. These are
recognized in profit or loss in the period they are incurred using the effective interest method.
Employee compensation and other benefits

Employee benefits are all forms of consideration given by the Company in exchange for service
rendered by employees or for the termination of employment.
 All short- term employee benefits

When an employee has rendered service to the Company during an accounting period, the
Company shall recognize the undiscounted amount of short-term employee benefits expected
to be paid in exchange for that service:

a) as a liability (accrued expense), after deducting any amount already paid. If the amount
already paid exceeds the undiscounted amount of the benefits, the Company shall
recognize that excess as an asset (prepaid expense) to the extent that the prepayment will
lead to, for example, a reduction in future payments or a cash refund.
b) as an expense, (requires or permits the inclusion of the benefits in the cost of an asset)
 Post-employment benefits
Post-employment benefits include items such as the following:
a) retirement benefits (eg pensions and lump sum payments on retirement); and
b) other post-employment benefits, such as post-employment life insurance and
post-employment medical care.
Arrangements whereby the Company provides post-employment benefits are

post-employment benefit plans. The Company applies this Standard to all such arrangements
whether or not they involve the establishment of a separate Company to receive contributions
and to pay benefits.
The Company account for the post-employment benefit plan using the accrual approach in
accordance with the minimum retirement benefits required under Republic Act (RA) No.
7641, otherwise known as The Philippine Retirement Pay Law.
Accrual approach is applied by calculating the expected liability as of reporting date using the
current salary of the entitled employees and the employees’ years of service, without
consideration of future changes in salary rates and service periods.
The Company shall recognize the liability for such post-employment benefit plan at the net
total of the following amounts: a) the accrued amount of the retirement benefits at the
reporting date; less b) the fair value of plan assets (if any) at the reporting date out of which
the obligations are to be settled directly.
 Other long-term employee benefits

Other long-term employee benefits may include items such as the following, (if there are
any) if not expected to be settled wholly before twelve months after the end of the annual
reporting period in which the employees render the related service:
a) long-term paid absences such as long-service or sabbatical leave;
b) jubilee or other long-service benefits;
c) long-term disability benefits;
d) profit-sharing and bonuses; and
e) deferred remuneration.
The measurement of other long-term employee benefits is not usually subject to the same
degree of uncertainty as the measurement of post-employment benefits. For this reason, this
Standard requires a simplified method of accounting for other long-term employee benefits.
Unlike the accounting required for post-employment benefits, this method does not recognize
remeasurements in other comprehensive income.
 Termination benefits
Deals termination benefits separately from other employee benefits because the event that
gives rise to an obligation is the termination of employment rather than employee service.
Termination benefits result from either the Company’s decision to terminate the employment
or an employee’s decision to accept the Company’s offer of benefits in exchange for
termination of employment.
The Company shall measure termination benefits on initial recognition, and shall measure

and recognize subsequent changes, in accordance with the nature of the employee benefit,
provided that if the termination benefits are an enhancement to post-employment benefits, the
Company shall apply the requirements for post-employment benefits. Otherwise:
a) if the termination benefits are expected to be settled wholly before twelve months after
the end of the annual reporting period in which the termination benefit is recognized, the
Company shall apply the requirements for short-term employee benefits.
b) if the termination benefits are not expected to be settled wholly before twelve months
after the end of the annual reporting period, the Company shall apply the requirements
for other long-term employee benefits.
Leases
At the commencement date, the Company assesses whether the lessee is reasonably certain to
exercise an option to extend the lease or to purchase the underlying asset, or not to exercise an
option to terminate the lease. The Company considers all relevant facts and circumstances that
create an economic incentive for the lessee to exercise, or not to exercise, the option, including
any expected changes in facts and circumstances from the commencement date until the exercise
date of the option.
The Company as a lessee

The Company shall recognize lease payments as an expense on a straight-line basis over the lease
term or another systematic basis.
Operating lease, the Company as a Lessor

The Company shall recognize lease payments from operating leases as income on either a
straight-line basis or another systematic basis. The lessor shall apply another systematic basis if
that basis is more representative of the pattern in which benefit from the use of the underlying
asset is diminished.
Recognition and measurement of leases are as follows:
a) A lessor shall recognize costs, including depreciation, incurred in earning the lease income as
an expense.
b) A lessor shall add initial direct costs incurred in obtaining an operating lease to the carrying
amount of the underlying asset and recognize those costs as an expense over the lease term on
the same basis as the lease income.
c) The depreciation policy for depreciable underlying assets subject to operating leases shall be
consistent with the lessor’s normal depreciation policy for similar assets.
d) A lessor shall determine whether an underlying asset subject to an operating lease is impaired
and to account for any impairment loss identified.
e) A lessor shall account for a modification to an operating lease as a new lease from the
effective date of the modification, considering any prepaid or accrued lease payments relating
to the original lease as part of the lease payments for the new lease.
Income tax
The tax base of an asset is the amount that will be deductible for tax purposes against any taxable
economic benefits that will flow to the Company when it recovers the carrying amount of the
asset. If those economic benefits will not be taxable, the tax base of the asset is equal to its
carrying amount.
The tax base of a liability is its carrying amount, less any amount that will be deductible for tax
purposes in respect of that liability in future periods. In the case of revenue which is received in
advance, the tax base of the resulting liability is its carrying amount, less any amount of the
revenue that will not be taxable in future periods.
Some items have a tax base but are not recognized as assets and liabilities in the statement of
financial position. Where the tax base of an asset or liability is not immediately apparent, it is
helpful to consider the fundamental principle upon which is based: that an Company shall, with
certain limited exceptions, recognize a deferred tax liability (asset) whenever recovery or
settlement of the carrying amount of an asset or liability would make future tax payments larger
(smaller) than they would be if such recovery or settlement were to have no tax consequence.
Temporary differences are differences between the carrying amount of an asset or liability in the
statement of financial position and its tax base. Temporary differences may be either:
a) taxable temporary differences, which are temporary differences that will result in taxable
amounts in determining taxable profit (tax loss) of future periods when the carrying amount
of the asset or liability is recovered or settled; or
b) deductible temporary differences, which are temporary differences that will result in
amounts that are deductible in determining taxable profit (tax loss) of future periods when
the carrying amount of the asset or liability is recovered or settled.
Some temporary differences arise when income or expense is included in accounting profit in one
period but is included in taxable profit in a different period. Such temporary differences are often
described as timing differences.
A deferred tax asset shall be recognized for all deductible temporary differences to the extent that
it is probable that taxable profit will be available against which the deductible temporary
difference can be utilized, unless the deferred tax asset arises from the initial recognition of an
asset or liability in a transaction that:
a) is not a business combination; and
b) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
When there are insufficient taxable temporary differences relating to the same taxation authority
and the same taxable Company, the deferred tax asset is recognized to the extent that:
a) it is probable that the Company will have sufficient taxable profit relating to the same
taxation authority and the same taxable Company in the same period as the reversal of the
deductible temporary difference (or in the periods into which a tax loss arising from the
deferred tax asset can be carried back or forward). In evaluating whether it will have
sufficient taxable profit in future periods, the Company:
 compares the deductible temporary differences with future taxable profit that excludes
tax deductions resulting from the reversal of those deductible temporary differences.
This comparison shows the extent to which the future taxable profit is sufficient for the
Company to deduct the amounts resulting from the reversal of those deductible
temporary differences; and
 ignores taxable amounts arising from deductible temporary differences that are
expected to originate in future periods, because the deferred tax asset arising from these
deductible temporary differences will itself require future taxable profit in order to be
utilized; or
b) tax planning opportunities are available to the Company that will create taxable profit in
appropriate periods.
The Company considers the following criteria in assessing the probability that taxable profit will
be available against which the unused tax losses or unused tax credits can be utilized:
a) whether the Company has sufficient taxable temporary differences relating to the same
taxation authority and the same taxable Company, which will result in taxable amounts
against which the unused tax losses or unused tax credits can be utilized before they expire;
b) whether it is probable that the Company will have taxable profits before the unused tax
losses or unused tax credits expire;
c) whether the unused tax losses result from identifiable causes which are unlikely to recur;
and

d) whether tax planning opportunities (see paragraph 30) are available to the Company that
will create taxable profit in the period in which the unused tax losses or unused tax credits
can be utilized.
To the extent that it is not probable that taxable profit will be available against which the unused
tax losses or unused tax credits can be utilized, the deferred tax asset is not recognized.
Earnings Per Share
Basic Earnings Per share

The Company shall calculate basic earnings per share amounts for profit or loss attributable to
ordinary equity holders of the parent Company and, if presented, profit or loss from continuing
operations attributable to those equity holders.
Basic earnings per share shall be calculated by dividing profit or loss attributable to ordinary
equity holders of the parent Company (the numerator) by the weighted average number of
ordinary shares outstanding (the denominator) during the period.
For the purpose of calculating basic earnings per share, the amounts attributable to ordinary
equity holders of the parent Company in respect of:
a) profit or loss from continuing operations attributable to the parent Company; and
b) profit or loss attributable to the parent Company
shall be the amounts in (a) and (b) adjusted for the after-tax amounts of preference dividends,
differences arising on the settlement of preference shares, and other similar effects of preference
shares classified as equity.
For the purpose of calculating basic earnings per share, the number of ordinary shares shall be the
weighted average number of ordinary shares outstanding during the period.
Diluted Earnings Per Share

The Company shall calculate diluted earnings per share amounts for profit or loss attributable to
ordinary equity holders of the parent Company and, if presented, profit or loss from continuing
operations attributable to those equity holders.
For the purpose of calculating diluted earnings per share, the Company shall adjust profit or loss
attributable to ordinary equity holders of the parent Company, and the weighted average number
of shares outstanding, for the effects of all dilutive potential ordinary shares.
For the purpose of calculating diluted earnings per share, the Company shall adjust profit or loss
attributable to ordinary equity holders of the parent Company, by the after-tax effect of:
a) any dividends or other items related to dilutive potential ordinary shares deducted in arriving
at profit or loss attributable to ordinary equity holders of the parent Company;
b) any interest recognized in the period related to dilutive potential ordinary shares; and
c) any other changes in income or expense that would result from the conversion of the dilutive
potential ordinary shares.
For the purpose of calculating diluted earnings per share, the number of ordinary shares shall be
the weighted average number of ordinary shares, plus the weighted average number of ordinary
shares that would be issued on the conversion of all the dilutive potential ordinary shares into

ordinary shares. Dilutive potential ordinary shares shall be deemed to have been converted into
ordinary shares at the beginning of the period or, if later, the date of the issue of the potential
ordinary shares.
Fair value Measurement
Fair value as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:
 In the principal market for the asset or liability, or
 In the absence of a principal market, in the most advantageous market for the asset or
liability.
The principal or the most advantageous market must be accessible to the Company.
The fair value of an asset or a liability is measured using the assumptions that market participant
would use when pricing the asset or liability, assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability
to generate economic benefits by using the asset in its highest and best use or by selling it to
another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measure or disclosed in the financial statements
are categorized within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole:
 Level 1- Quoted (unadjusted) market prices in active markets for identical assets or
liabilities
 Level 2- Valuation techniques for which the lowest level input that is significant to the
fair value measurement is directly or indirectly observable
 Level 3- Valuation techniques for which the lowest level input that is significant to the
fair value measurement is unobservable.
For the purpose of fair value disclosures, the Company has determined classes of assets and
liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level
of the fair value hierarchy.
Financial Instruments
Presentation:
The issuer of a financial instrument shall classify the instrument, or its component parts, on initial
recognition as a financial liability, a financial asset or an equity instrument in accordance with the
substance of the contractual arrangement and the definitions of a financial liability, a financial
asset and an equity instrument.
The sum of the carrying amounts assigned to the liability and equity components on initial
recognition is always equal to the fair value that would be ascribed to the instrument as a whole.
No gain or loss arises from initially recognizing the components of the instrument separately.

Initial recognition of financial assets and liabilities
The Company shall recognize a financial asset or a financial liability in its statement of financial
position when, and only when, the Company becomes party to the contractual provisions of the
instrument.
Initial measurement
Except for trade receivables, at initial recognition, an Company shall measure a financial asset or
financial liability at its fair value plus or minus, in the case of a financial asset or financial
liability not at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition or issue of the financial asset or financial liability.
However, if the fair value of the financial asset or financial liability at initial recognition differs
from the transaction price, the best evidence of the fair value of a financial instrument at initial
recognition is normally the transaction price (i.e. the fair value of the consideration given or
received.
The fair value of a financial instrument at initial recognition is normally the transaction price (ie
the fair value of the consideration given or received. However, if part of the consideration given
or received is for something other than the financial instrument, an Company shall measure the
fair value of the financial instrument, i.e. the fair value of a long-term loan or receivable that
carries no interest can be measured as the present value of all future cash receipts discounted
using the prevailing market rate(s) of interest for a similar instrument (similar as to currency,
term, type of interest rate and other factors) with a similar credit rating. Any additional amount
lent is an expense or a reduction of income unless it qualifies for recognition as some other type
of asset.
For financial assets

a) For trade receivables to a customer on a short-term credit, a receivable is measured at their
transaction price (i.e. the fair value of the consideration given or received);
b) For investment in equity instrument, is measured at their transaction price (i.e. the fair value
of the consideration paid) which is normally the cost of the shares acquired, plus or minus,
transaction costs that are directly attributable to the acquisition of financial asset.
For financial liabilities

a) For trade payables for goods purchased from a supplier on short-term credit, are measured at
their transaction price (i.e. the fair value of the consideration given or received, and
subsequently measured at amortized cost.
b) For due to stockholders, are non-derivative financial liability with fixed or determinable
payments that are measured at their transaction price (i.e. the fair value of the consideration
received) which is normally the amount owed to stockholders plus or minus, transaction costs
that are directly attributable to issue of the financial liability.
c) For loans payable, is measured at fair value which is the present value of cash payable to the
bank (including interest payments and repayment of principal) plus or minus, transaction
costs that are directly attributable to the issue of the financial liability.
Subsequent measurement
For Financial Assets

a) For trade receivables to a customer on short-term credit, a receivable is measured at the
amortized cost.
b) For investment in equity instrument, is measured at cost whose fair value cannot be reliably
measured.

For Financial Liabilities
a) For trade payables for goods purchased from a supplier on short-term credit, are measured at
amortized cost.
b) For due to stockholders, are measured at amortized cost, minus any principal repayments
without regard to the Company’s intention to hold them to maturity.
c) For loans payable, is measured at amortized cost, using effective interest method without
regard to the Company’s intention to hold them to maturity.
Impairment of financial assets:

The objective of the impairment requirements is to recognize lifetime expected credit losses for
all financial instruments for which there have been significant increases in credit risk since initial
recognition — whether assessed on an individual or collective basis — considering all reasonable
and supportable information, including that which is forward-looking.
The Company shall recognize in profit or loss, as an impairment gain or loss, the amount of
expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting
date to the amount that is required to be recognized.
At each reporting date, the Company shall assess whether the credit risk on a financial instrument
has increased significantly since initial recognition. When making the assessment, the Company
shall use the change in the risk of a default occurring over the expected life of the financial
instrument instead of the change in the amount of expected credit losses. To make that
assessment, an Company shall compare the risk of a default occurring on the financial instrument
as at the reporting date with the risk of a default occurring on the financial instrument as at the
date of initial recognition and consider reasonable and supportable information, that is available
without undue cost or effort, that is indicative of significant increases in credit risk since initial
recognition.
The Company may assume that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low credit
risk at the reporting date.
If reasonable and supportable forward-looking information is available without undue cost or

effort, the Company cannot rely solely on past due information when determining whether credit
risk has increased significantly since initial recognition. However, when information that is more
forward-looking than past due status (either on an individual or a collective basis) is not available
without undue cost or effort, the Company may use past due information to determine whether
there have been significant increases in credit risk since initial recognition. Regardless of the way
in which the Company assesses significant increases in credit risk, there is a rebuttable
presumption that the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due. The Company can rebut
this presumption if the Company has reasonable and supportable information that is available
without undue cost or effort, that demonstrates that the credit risk has not increased significantly
since initial recognition even though the contractual payments are more than 30 days past due.
When the Company determines that there have been significant increases in credit risk before
contractual payments are more than 30 days past due, the rebuttable presumption does not apply.
The Company shall measure expected credit losses of a financial instrument in a way that reflects:
a) an unbiased and probability-weighted amount that is determined by evaluating a range of
possible outcomes;
b) the time value of money; and

c) reasonable and supportable information that is available without undue cost or effort at the
reporting date about past events, current conditions and forecasts of future economic
conditions.
Derecognition of a financial asset:

The Company shall derecognize a financial asset when, and only when:
a) the contractual rights to the cash flows from the financial asset expire, or
b) it transfers the financial asset and the transfer qualifies for derecognition.
The Company transfers a financial asset if, and only if, it either:
a) transfers the contractual rights to receive the cash flows of the financial asset, or
b) retains the contractual rights to receive the cash flows of the financial asset, but assumes a
contractual obligation to pay the cash flows to one or more recipients
When the Company retains the contractual rights to receive the cash flows of a financial asset
(the ‘original asset’), but assumes a contractual obligation to pay those cash flows to one or more
entities (the ‘eventual recipients’), the Company treats the transaction as a transfer of a financial
asset if, and only if, all of the following three conditions are met.
a) The Company has no obligation to pay amounts to the eventual recipients unless it collects
equivalent amounts from the original asset. Short-term advances by the Company with the
right of full recovery of the amount lent plus accrued interest at market rates do not violate
this condition.
b) The Company is prohibited by the terms of the transfer contract from selling or pledging the
original asset other than as security to the eventual recipients for the obligation to pay them
cash flows.
c) The Company has an obligation to remit any cash flows it collects on behalf of the eventual
recipients without material delay. In addition, the Company is not entitled to reinvest such
cash flows, except for investments in cash or cash equivalents during the short settlement
period from the collection date to the date of required remittance to the eventual recipients,
and interest earned on such investments is passed to the eventual recipients.
When the Company transfers a financial asset, it shall evaluate the extent to which it retains the
risks and rewards of ownership of the financial asset. In this case:
a) if the Company transfers substantially all the risks and rewards of ownership of the financial
asset, the Company shall derecognize the financial asset and recognize separately as assets
or liabilities any rights and obligations created or retained in the transfer.
b) if the Company retains substantially all the risks and rewards of ownership of the financial
asset, the Company shall continue to recognize the financial asset.
c) if the Company neither transfers nor retains substantially all the risks and rewards of
ownership of the financial asset, the Company shall determine whether it has retained
control of the financial asset. In this case:
 if the Company has not retained control, it shall derecognize the financial asset and
recognize separately as assets or liabilities any rights and obligations created or retained
in the transfer.
 if the Company has retained control, it shall continue to recognize the financial asset to
the extent of its continuing involvement in the financial asset.
Derecognition of a financial liability

The Company shall remove a financial liability (or a part of a financial liability) from its
statement of financial position when, and only when, it is extinguished—i.e. when the obligation
specified in the contract is discharged or cancelled or expires.

An exchange between an existing borrower and lender of debt instruments with substantially
different terms shall be accounted for as an extinguishment of the original financial liability and
the recognition of a new financial liability. Similarly, a substantial modification of the terms of an
existing financial liability or a part of it (whether or not attributable to the financial difficulty of
the debtor) shall be accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability.
The difference between the carrying amount of a financial liability (or part of a financial liability)
extinguished or transferred to another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, shall be recognized in profit or loss.
Offsetting a financial asset and a financial liability

A financial asset and a financial liability shall be offset and the net amount presented in the
statement of financial position when, and only when, the Company:
a) currently has a legally enforceable right to set off the recognized amounts; and
b) intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the
Company shall not offset the transferred asset and the associated liability.
Offsetting a recognized financial asset and a recognized financial liability and presenting the net
amount differs from the derecognition of a financial asset or a financial liability. Although
offsetting does not give rise to recognition of a gain or loss, the derecognition of a financial
instrument not only results in the removal of the previously recognized item from the statement of
financial position but also may result in recognition of a gain or loss.
A right of set-off is a debtor’s legal right, by contract or otherwise, to settle or otherwise eliminate
all or a portion of an amount due to a creditor by applying against that amount an amount due
from the creditor. In unusual circumstances, a debtor may have a legal right to apply an amount
due from a third party against the amount due to a creditor provided that there is an agreement
between the three parties that clearly establishes the debtor’s right of set-off. Because the right of
set-off is a legal right, the conditions supporting the right may vary from one legal jurisdiction to
another and the laws applicable to the relationships between the parties need to be considered.
The existence of an enforceable right to set off a financial asset and a financial liability affects the
rights and obligations associated with a financial asset and a financial liability and may affect the
Company’s exposure to credit and liquidity risk. However, the existence of the right, by itself, is
not a sufficient basis for offsetting. In the absence of an intention to exercise the right or to settle
simultaneously, the amount and timing of the Company’s future cash flows are not affected.
When the Company intends to exercise the right or to settle simultaneously, presentation of the
asset and liability on a net basis reflects more appropriately the amounts and timing of the
expected future cash flows, as well as the risks to which those cash flows are exposed. An
intention by one or both parties to settle on a net basis without the legal right to do so is not
sufficient to justify offsetting because the rights and obligations associated with the individual
financial asset and financial liability remain unaltered.
Impairment of Assets
An asset is impaired when its carrying amount exceeds its recoverable amount.
If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying
amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment
loss.

The recoverable amount of a cash-generating unit is the higher of the cash-generating unit’s fair
value less costs of disposal and its value in use. For the purpose of determining the recoverable
amount of a cash-generating unit. The carrying amount of a cash-generating unit shall be
determined on a basis consistent with the way the recoverable amount of the cash-generating unit
is determined.
The carrying amount of a cash-generating unit:

a) includes the carrying amount of only those assets that can be attributed directly, or allocated
on a reasonable and consistent basis, to the cash-generating unit and will generate the future
cash inflows used in determining the cash-generating unit’s value in use; and
b) does not include the carrying amount of any recognized liability, unless the recoverable
amount of the cash-generating unit cannot be determined without consideration of this
liability.
The Company shall assess at the end of each reporting period whether there is any indication that
an impairment loss recognized in prior periods for an asset may no longer exist or may have
decreased. If any such indication exists, the Company shall estimate the recoverable amount of
that asset.
An impairment loss recognized in prior periods for an asset shall be reversed if, and only if, there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognized. If this is the case, the carrying amount of the asset shall, be
increased to its recoverable amount. That increase is a reversal of an impairment loss.
A reversal of an impairment loss reflects an increase in the estimated service potential of an asset,
either from use or from sale, since the date when the Company last recognized an impairment loss
for that asset.
In allocating a reversal of an impairment loss for a cash-generating unit, the carrying amount of
an asset shall not be increased above the lower of:
a) its recoverable amount (if determinable); and
b) the carrying amount that would have been determined (net of amortization or depreciation)
had no impairment loss been recognized for the asset in prior periods.
The Company shall assess at the end of each reporting period whether there is any indication that
an asset may be impaired. If any such indication exists, the Company shall estimate the
recoverable amount of the asset.
Provisions and contingencies

Recognition:
1) Provision
A provision shall be recognized when:
a) the Company has a present obligation (legal or constructive) as a result of a past event;
b) it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation; and
c) a reliable estimate can be made of the amount of the obligation.
If these conditions are not met, no provision shall be recognized.
2) Contingent Liabilities
The Company shall not recognize a contingent liability.
A contingent liability is disclosed, unless the possibility of an outflow of resources

embodying economic benefits is remote.
3) Contingent Assets
The Company shall not recognize a contingent asset.
Contingent assets usually arise from unplanned or other unexpected events that give rise to
the possibility of an inflow of economic benefits to the Company. An example is a claim that
the Company is pursuing through legal processes, where the outcome is uncertain.
Contingent assets are not recognized in financial statements since this may result in the
recognition of income that may never be realized. However, when the realization of income is
virtually certain, then the related asset is not a contingent asset and its recognition is
appropriate.
A contingent asset is disclosed, where an inflow of economic benefits is probable.
Measurement:
The amount recognized as a provision shall be the best estimate of the expenditure required to
settle the present obligation at the end of the reporting period.
The best estimate of the expenditure required to settle the present obligation is the amount that an
Company would rationally pay to settle the obligation at the end of the reporting period or to
transfer it to a third party at that time. It will often be impossible or prohibitively expensive to
settle or transfer an obligation at the end of the reporting period. However, the estimate of the
amount that the Company would rationally pay to settle or transfer the obligation gives the best
estimate of the expenditure required to settle the present obligation at the end of the reporting
period.
Uncertainties surrounding the amount to be recognized as a provision are dealt with by various
means according to the circumstances. Where the provision being measured involves a large
population of items, the obligation is estimated by weighting all possible outcomes by their
associated probabilities. The name for this statistical method of estimation is ‘expected value’.
The provision will therefore be different depending on whether the probability of a loss of a given
amount is. Where there is a continuous range of possible outcomes, and each point in that range is
as likely as any other, the mid-point of the range is used.
The risks and uncertainties that inevitably surround many events and circumstances shall be taken
into account in reaching the best estimate of a provision.
Where the effect of the time value of money is material, the amount of a provision shall be the
present value of the expenditures expected to be required to settle the obligation.
Future events that may affect the amount required to settle an obligation shall be reflected in the
amount of a provision where there is sufficient objective evidence that they will occur
Provisions shall be reviewed at the end of each reporting period and adjusted to reflect the current
best estimate. If it is no longer probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, the provision shall be reversed.
No provisions and contingencies recognized during the period.
Events after the end of the reporting period

Events after the end of the reporting period are those events, favorable and unfavorable, that

occur between the end of the reporting period and the date when the financial statements are
authorized for issue.
The Company shall adjust the amounts recognized in its financial statements, including related
disclosures, to reflect adjusting events after the end of the reporting period.
The Company shall not adjust the amounts recognized in its financial statements to reflect non-
adjusting events after the end of the reporting.
If the Company declares dividends to holders of its equity instruments after the end of the
reporting period, the Company shall not recognize those dividends as a liability at the end of the
reporting period. The amount of the dividend may be presented as a segregated component of
retained earnings at the end of the reporting period.
Related party disclosures

A related party is a person or entity that is related to the Company that is preparing its financial
statements referred to as the ‘reporting entity’.
A person or a close member of that person’s family is related to the Company if that person:
 has control or joint control of the Company;
 has significant influence over the Company; or
 is a member of the key management personnel of the Company or of a parent of the
Company.
5. MANAGEMENT’S SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND

ASSUMPTIONS
The Company shall disclose, along with its significant accounting policies or other notes, the
judgements, apart from those involving estimations, that management has made in the process of
applying the Company’s accounting policies and that have the most significant effect on the
amounts recognized in the financial statements.
In the absence of an IFRS that specifically applies to a transaction, other event or condition,
management shall use its judgement in developing and applying an accounting policy that results
in information that is:
a) relevant to the economic decision-making needs of users; and
b) reliable, in that the financial statements:
 represent faithfully the financial position, financial performance and cash flows of the
Company;
 reflect the economic substance of transactions, other events and conditions, and not merely
the legal form;
 are neutral, i.e. free from bias;
 are prudent; and
 are complete in all material respects.
Estimates
It is frequently necessary to make estimates in applying an accounting policy to elements of
financial statements recognized or disclosed in respect of transactions, other events or conditions.
Estimation is inherently subjective, and estimates may be developed after the reporting period.
Developing estimates is potentially more difficult when retrospectively applying an accounting
policy or making a retrospective restatement to correct a prior period error, because of the longer
period of time that might have passed since the affected transaction, other event or condition
occurred. However, the objective of estimates related to prior periods remains the same as for
estimates made in the current period, namely, for the estimate to reflect the circumstances that
existed when the transaction, other event or condition occurred.
The Company shall disclose information about the assumptions it makes about the future, and
other major sources of estimation uncertainty at the end of the reporting period, that have a
significant risk of resulting in a material adjustment to the carrying amounts of assets and
liabilities within the next financial year. In respect of those assets and liabilities, the notes shall
include details of:
a) their nature, and
b) their carrying amount as at the end of the reporting period.
Determining the carrying amounts of some assets and liabilities requires estimation of the effects
of uncertain future events on those assets and liabilities at the end of the reporting period. These
estimates involve assumptions about such items as the risk adjustment to cash flows or discount
rates, future changes in salaries and future changes in prices affecting other costs.
Critical management judgments in applying accounting policies

In the process of applying the Company’s accounting policies, management makes various
judgements, apart from those involving estimations, that can significantly affect the amounts it
recognizes in the financial statements. management makes judgements in determining:
a) when substantially all the significant risks and rewards of ownership of financial assets and,
for lessors, assets subject to leases are transferred to other entities;
b) whether, in substance, particular sales of goods are financing arrangements and therefore do
not give rise to revenue; and
c) whether the contractual terms of a financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding.
In the process of applying the Company’s accounting policies, the management has made the
following judgments, apart from those involving estimations, which have the most significant
effect on the amounts recognized in the financial statements:
(a) Going concern uncertainty issue

When preparing financial statements, management shall make an assessment of the
Company’s ability to continue as a going concern. The Company shall prepare financial
statements on a going concern basis unless management either intends to liquidate the
Company or to cease trading, or has no realistic alternative but to do so. When management is
aware, in making its assessment, of material uncertainties related to events or conditions that
may cast significant doubt upon the Company’s ability to continue as a going concern, the
Company shall disclose those uncertainties. When the Company does not prepare financial
statements on a going concern basis, it shall disclose that fact, together with the basis on
which it prepared the financial statements and the reason why the Company is not regarded as
a going concern.
In assessing whether the going concern assumption is appropriate, management takes into
account all available information about the future, which is at least, but is not limited to,
twelve months from the end of the reporting period. The degree of consideration depends on
the facts in each case. When the Company has a history of profitable operations and ready
access to financial resources, the Company may reach a conclusion that the going concern
basis of accounting is appropriate without detailed analysis. In other cases, management may
need to consider a wide range of factors relating to current and expected profitability, debt

repayment schedules and potential sources of replacement financing before it can satisfy itself
that the going concern basis is appropriate.
The management shall evaluate whether relevant conditions and events, considered in the
aggregate, indicate that it is probable that the Company will be unable to meet its obligations
as they become due within one year after the date that the financial statements are issued.
The evaluation initially shall not take into consideration the potential mitigating effect of
management’s plans that have not been fully implemented as of the date that the financial
statements are issued.
When evaluating the Company’s ability to meet its obligations, the management shall
consider quantitative and qualitative information about the following conditions and events,
among other relevant conditions and events known and reasonably knowable at the date that
the financial statements are issued:
 The Company’s current financial condition, including its liquidity sources at the date that
the financial statements are issued such as available liquid funds and available access to
credit.
 The Company’s conditional and unconditional obligations due or anticipated within one
year after the date that the financial statements are issued.
 The funds necessary to maintain the Company’s operations considering its current
financial condition, obligations and other expected cash flows within one year after the
date that the financial statements are issued.
 The other conditions and events, when considered in conjunction with the immediately
preceding paragraphs that may adversely affect the Company’s ability to meet its
obligations within one year after the date that the financial statements are issued.
When relevant conditions or events, considered in the aggregate, initially indicate that it is
probable that an Company will be unable to meet its obligations as they become due within
one year after the date that the financial statements are issued (and therefore they raise
substantial doubt about the Company’s ability to continue as a going concern), management
shall evaluate whether its plans that are intended to mitigate those conditions and events,
when implemented, will alleviate substantial doubt about the Company’s ability to continue
as a going concern.
The mitigating effect of management’s plans shall be considered in evaluating whether the
substantial doubt is alleviated only to the extent that information available, as of the date that
the financial statements are issued, indicates both of the following:
a. It is probable that management’s plans will be effectively implemented within one year
after the date that the financial statements are issued.
b. It is probable that management’s plans, when implemented, will mitigate the relevant
conditions or events that raise substantial doubt about the Company’s ability to continue
as a going concern within one year after the date that the financial statements are issued.
The evaluation of whether it is probable that management’s plans will be effectively

implemented within one year after the date that the financial statements are issued shall be
based on the feasibility of implementation of management’s plans in light of the Company’s
specific facts and circumstances.
Generally, to be considered probable of being effectively implemented, management (or

others with the appropriate authority) must have approved the plan before the date that the
financial statements are issued.

The mitigating effect of management’s plans that are not probable of being effectively
implemented within one year after the date that the financial statements are issued shall not be
considered in evaluating whether substantial doubt about a Company’s ability to continue as a
going concern is alleviated.
(b) Non-application of projected unit credit method

The Company shall use the projected unit credit method to determine the present value of its
defined benefit obligations and the related current service cost and, where applicable, past
service cost.
The projected unit credit method (sometimes known as the accrued benefit method pro-rated
on service or as the benefit/years of service method) sees each period of service as giving rise
to an additional unit of benefit entitlement and measures each unit separately to build up the
final obligation.
The projected unit credit method requires the Company to attribute benefit to the current
period (in order to determine current service cost) and the current and prior periods (in order
to determine the present value of defined benefit obligations). The Company attributes benefit
to periods in which the obligation to provide post-employment benefits arise. That obligation
arises as employees render services in return for post-employment benefits that the Company
expects to pay in future reporting periods. Actuarial techniques allow the Company to
measure that obligation with sufficient reliability to justify recognition of a liability.
In applying the above guidelines, the Company considered to fully adopt the requirements.
However, the Company decided to depart from this because they believe that the assumptions
used in its retirement benefit plan under Republic Act 7641 provides more reasonable and
appropriate estimation of retirement benefits obligations.
The Company has a retirement plan under framework of the Philippines under R.A 7641. The
company is legally obliged to provide a minimum retirement pay for qualified employees
upon retirement. The framework however does not have minimum funding requirement. The
Company's benefit plan is aligned with this framework.
An accrual has been recognized during the year to cover any retirement and resignation
benefit obligation for qualified employees as of the current period amounting to P 5,219,036
(Note 18).
(c) Provisions and contingencies

Judgment is exercised by the management to distinguish between provisions and
contingencies.
Risk describes variability of outcome. A risk adjustment may increase the amount at which a
liability is measured. Caution is needed in making judgements under conditions of
uncertainty, so that income or assets are not overstated and expenses or liabilities are not
understated. However, uncertainty does not justify the creation of excessive provisions or a
deliberate overstatement of liabilities. For example, if the projected costs of a particularly
adverse outcome are estimated on a prudent basis, that outcome is not then deliberately
treated as more probable than is realistically the case. Care is needed to avoid duplicating
adjustments for risk and uncertainty with consequent overstatement of a provision.
In a general sense, all provisions are contingent because they are uncertain in timing or
amount. However, the term ‘contingent’ is used for liabilities and assets that are not

recognized because their existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the control of the
Company.
The use of estimates is an essential part of the preparation of financial statements and does
not undermine their reliability. This is especially true in the case of provisions, which by their
nature are more uncertain than most other items in the statement of financial position. Except
in extremely rare cases, the Company will be able to determine a range of possible outcomes
and can therefore make an estimate of the obligation that is sufficiently reliable to use in
recognizing a provision.
Key Sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation
uncertainty at the end of the reporting period, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
1. Estimating the recoverability of receivables

Information about expected dates of realization of assets and liabilities is useful in assessing
the liquidity and solvency of the Company.
The operating cycle of the Company is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents. When the Company’s normal
operating cycle is not clearly identifiable, it is assumed to be twelve months. Current assets
include assets (such as inventories and trade receivables) that are sold, consumed or realized
as part of the normal operating cycle even when they are not expected to be realized within
twelve months after the reporting period.
The Company evaluates the status of the receivables based on available facts and
circumstances, including, but not limited to, the length of the Company’s relationship with the
customers, the customers, current credit status based on third party credit reports and known
market forces, average of the accounts and historical loss experience.
The Company estimates the allowance for doubtful accounts related to the receivables if
there’s any, based on assessment of specific accounts where the Company has information
that certain customers are unable to meet their financial obligation. In these cases, judgment
used was based in the best available facts and circumstances including, but not limited to, the
length of relationship with the customers and the customers’ current credit status based on
third party credit reports and known market factors, The Company used judgments to record
specifics reserves for customers against amount due to reduce the expected collectible
amounts. These reserves are re-evaluated and adjusted as additional information received
impacts the amounts estimated.
The amount of timing of recorded expenses for any period would differ if different judgments
were made or different estimates were utilized. An increase in the allowance for doubtful
accounts would increase the recognized operating expenses and decrease current assets.
2. Provision for expected credit losses of trade receivables

The Company uses a provision matrix to calculate expected credit losses ("ECLs") for trade
receivables. The provision rates are based on days past due for groupings of various customer
segments that have similar loss patterns.
The provision matrix is initially based on the Company's historical observed default rates. The

Company will calibrate the matrix to adjust historical credit loss experience with forward-
looking information. At every reporting date, historical default rates are updated and changes
in the forward-looking estimates are analyzed.
The assessment of the correlation between historical observed default rates, forecast
economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to
changes in circumstances and of forecast economic conditions. The Company's historical
credit loss experience and forecast of economic conditions may also not be representative of
customer's actual default in future.
Provision for ECL amounted to P 4,677,529 for the year 2019 (see Note 24). Trade and other
receivables, net of allowance for ECL amounted to P 273,988,927 and P 315,249,431 as at
December 31, 2019 and 2018, respectively. Allowance for ECL amounted to P 4,677,529 for
the year 2019 (See Note 8).
3. Estimating inventories at net realizable value

Estimates of net realizable value are based on the most reliable evidence available at the time
the estimates are made, of the amount the inventories are expected to realize. These estimates
take into consideration fluctuations of price or cost directly relating to events occurring after
the end of the period to the extent that such events confirm conditions existing at the end of
the period.
Estimates of net realizable value also take into consideration the purpose for which the
inventory is held. For example, the net realizable value of the quantity of inventory held to
satisfy firm sales or service contracts is based on the contract price. If the sales contracts are
for less than the inventory quantities held, the net realizable value of the excess is based on
general selling prices. Provisions may arise from firm sales contracts in excess of inventory
quantities held or from firm purchase contracts.
A new assessment is made of net realizable value in each subsequent period. When the
circumstances that previously caused inventories to be written down below cost no longer
exist or when there is clear evidence of an increase in net realizable value because of changed
economic circumstances, the amount of the write-down is reversed (ie the reversal is limited
to the amount of the original write-down) so that the new carrying amount is the lower of the
cost and the revised net realizable value. This occurs, for example, when an item of inventory
that is carried at net realizable value, because its selling price has declined, is still on hand in
a subsequent period and its selling price has increased.
As of December 31, 2019 and 2018, the Company determined that the net realizable value
exceeds their costs, thus, no impairment loss is recognized or reversed in the profit or loss for
the period.
4. Reviewing residual values, useful lives and depreciation method of property and equipment
Selection of the depreciation method and estimation of the useful life of assets are matters of
judgement. Therefore, disclosure of the methods adopted and the estimated useful lives or
depreciation rates provides users of financial statements with information that allows them to
review the policies selected by management and enables comparisons to be made with other
entities.
If there is an indication that an asset may be impaired, this may indicate that the remaining
useful life, the depreciation (amortization) method or the residual value for the asset needs to
be reviewed and adjusted, even if no impairment loss is recognized for the asset.

After the recognition of an impairment loss, the depreciation (amortization) charge for the
asset shall be adjusted in future periods to allocate the asset’s revised carrying amount, less
its residual value (if any), on a systematic basis over its remaining useful life.
During the period, management assessed that there is no indication of significant change from
those of previous estimates since the most recent annual reporting period.
5. Asset impairment
The Company shall assess at the end of each reporting period whether there is any indication
that an asset may be impaired. If any such indication exists, the Company shall estimate the
recoverable amount of the asset.
Recoverable amount is determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or groups of assets. If this
is the case, recoverable amount is determined for the cash-generating unit to which the asset
belongs, unless either:
a) the asset’s fair value less costs of disposal is higher than its carrying amount; or
b) the asset’s value in use can be estimated to be close to its fair value less costs of disposal
and fair value less costs of disposal can be measured.
In assessing whether there is any indication that an asset may be impaired, the Company shall
consider, as a minimum, the following indications:
a) External sources of information (i.e. there are observable indications that the asset’s
value has declined during the period significantly more than would be expected as a
result of the passage of time or normal use)
b) Internal sources of information (i.e. evidence is available of obsolescence or physical
damage of an asset).
If there is any indication that an asset may be impaired, recoverable amount shall be
estimated for the individual asset. If it is not possible to estimate the recoverable amount of
the individual asset, the Company shall determine the recoverable amount of the
cash-generating unit to which the asset belongs (the asset’s cash-generating unit).
The recoverable amount of an individual asset cannot be determined if:

a) the asset’s value in use cannot be estimated to be close to its fair value less costs of
disposal (for example, when the future cash flows from continuing use of the asset
cannot be estimated to be negligible); and
b) the asset does not generate cash inflows that are largely independent of those from other
assets.
In such cases, value in use and, therefore, recoverable amount, can be determined only for the
asset’s cash-generating unit.
During the period, management believes there is no of impairment losses recognized or

reversed in the profit or loss.
e) Revenue recognition
To identify performance obligations in such contracts, the Company shall assess whether the
fee relates to the transfer of a promised good or service. In many cases, even though a non-

refundable upfront fee relates to an activity that the Company is required to undertake at or
near contract inception to fulfil the contract, that activity does not result in the transfer of a
promised good or service to the customer. Instead, the upfront fee is an advance payment for
future goods or services and, therefore, would be recognized as revenue when those future
goods or services are provided. The revenue recognition period would extend beyond the
initial contractual period if the Company grants the customer the option to renew the contract
and that option provides the customer with a material right.
At the end of each reporting period, the Company shall update the estimated transaction price
(including updating its assessment of whether an estimate of variable consideration is
constrained) to represent faithfully the circumstances present at the end of the reporting
period and the changes in circumstances during the reporting period.
The objective when adjusting the promised amount of consideration for a significant
financing component is for an Company to recognize revenue at an amount that reflects the
price that a customer would have paid for the promised goods or services if the customer had
paid cash for those goods or services when (or as) they transfer to the customer (i.e. the cash
selling price). The Company shall consider all relevant facts and circumstances in assessing
whether a contract contains a financing component and whether that financing component is
significant to the contract, including both of the following:
a) the difference, if any, between the amount of promised consideration and the cash selling
price of the promised goods or services; and
b) the combined effect of both of the following:
 the expected length of time between when the Company transfers the promised
goods or services to the customer and when the customer pays for those goods or
services; and
 the prevailing interest rates in the relevant market.
f) Estimating retirement benefits

The determination of the Company’s obligation and cost of retirement benefits is dependent
on the selection of certain assumptions by management.
During the period, the management decided not to set aside any provision for retirement
benefits. Nonetheless, should this become due for payment to qualified employees, the
Company shall comply with the provisions of Republic Act (R.A.) No. 7641, “Retirement
Pay Law.”
6. FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES
Concentrations of risk arise from financial instruments that have similar characteristics and are
affected similarly by changes in economic or other conditions. The identification of
concentrations of risk requires judgement taking into account the circumstances of the Company.
Disclosure of concentrations of risk shall include:
a) a description of how management determines concentrations;
b) a description of the shared characteristic that identifies each concentration (eg counterparty,
geographical area, currency or market); and
c) the amount of the risk exposure associated with all financial instruments sharing that
characteristic.
The main purpose of the Company’s principal financial instruments is to fund its operational and
capital expenditures. The Company’s risk management is coordinated and in close operation with
the Board of Directors and focuses on actively securing the Company’s short to medium term

cash flows by minimizing the exposure to financial markets.
The Company’s activities expose it to a variety of financial risks: credit risk and liquidity risk
The Company’s overall risk management program seeks to minimize potential adverse effects on
the financial performance of the Company.
The policies for managing specific risks are summarized below:
Interest Rate Risk

Interest rate risk arises on interest-bearing financial instruments recognized in the statement of
financial position (e.g. debt instruments acquired or issued) and on some financial instruments not
recognized in the statement of financial position (e.g. some loan commitments).
Some exposures result from positions that frequently change, for example, the interest rate risk of
an open portfolio of debt instruments. The addition of new debt instruments and the derecognition
of debt instruments continuously change that exposure (ie it is different from simply running off a
position that matures). This is a dynamic process in which both the exposure and the hedging
instruments used to manage it do not remain the same for long. Consequently, the Company with
such an exposure frequently adjusts the hedging instruments used to manage the interest rate risk
as the exposure changes.
Market Risk
If the Company prepares a sensitivity analysis, such as value-at-risk, that reflects
interdependencies between risk variables (e.g. interest rates and exchange rates) and uses it to
manage financial risks, it may use that sensitivity analysis.
Unless the Company complies with value-at-risk, it shall disclose:

a) a sensitivity analysis for each type of market risk to which the Company is exposed at the
end of the reporting period, showing how profit or loss and equity would have been affected
by changes in the relevant risk variable that were reasonably possible at that date;
b) the methods and assumptions used in preparing the sensitivity analysis; and
c) changes from the previous period in the methods and assumptions used, and the reasons for
such changes.
Currency Risk
Currency risk (or foreign exchange risk) arises on financial instruments that are denominated in a
foreign currency, i.e. in a currency other than the functional currency in which they are measured.
Currency risk does not arise from financial instruments that are non-monetary items or from
financial instruments denominated in the functional currency.
Management of Financial Risk
a) Governance Framework
The management of a reporting Company is also interested in financial information about the
Company. However, management need not rely on general purpose financial reports because
it is able to obtain the financial information it needs internally.
Changes in a reporting Company’s economic resources and claims result from that
Company’s financial performance and from other events or transactions such as issuing debt
or equity instruments. To properly assess both the prospects for future net cash inflows to the
reporting Company and management’s stewardship of the Company’s economic resources,

users need to be able to identify those two types of changes.
Information about a reporting Company’s financial performance helps users to understand the
return that the Company has produced on its economic resources. Information about the
return the Company has produced can help users to assess management’s stewardship of the
Company’s economic resources. Information about the variability and components of that
return is also important, especially in assessing the uncertainty of future cash flows.
Information about a reporting Company’s past financial performance and how its
management discharged its stewardship responsibilities is usually helpful in predicting the
Company’s future returns on its economic resources.
b) Capital Management Framework

Information about the nature and amounts of a reporting Company’s economic resources and
claims can help users to identify the reporting Company’s financial strengths and
weaknesses. That information can help users to assess the reporting Company’s liquidity and
solvency, its needs for additional financing and how successful it is likely to be in obtaining
that financing. That information can also help users to assess management’s stewardship of
the Company’s economic resources. Information about priorities and payment requirements
of existing claims helps users to predict how future cash flows will be distributed among
those with a claim against the reporting Company.
A reporting Company’s economic resources and claims may also change for reasons other
than financial performance, such as issuing debt or equity instruments. Information about this
type of change is necessary to give users a complete understanding of why the reporting
Company’s economic resources and claims changed and the implications of those changes for
its future financial performance.
c) Regulatory Framework
The operations of the Company are also subject to the regulatory requirements of Securities
and Exchange Commission (SEC). Such regulations not only prescribe approval and
monitoring of activities but also impose certain restrictive provisions.
Information about how efficiently and effectively the reporting Company’s management has
discharged its responsibilities to use the Company’s economic resources helps users to assess
management’s stewardship of those resources. Such information is also useful for predicting
how efficiently and effectively management will use the Company’s economic resources in
future periods. Hence, it can be useful for assessing the Company’s prospects for future net
cash inflows.
Examples of management’s responsibilities to use the Company’s economic resources

include protecting those resources from unfavourable effects of economic factors, such as
price and technological changes, and ensuring that the Company complies with applicable
laws, regulations and contractual provisions.
d) Financial Risk
The Company discloses information that enables users of its financial statements to evaluate
the nature and extent of risks arising from financial instruments to which the Company is
exposed at the end of the reporting period.
Providing qualitative disclosures in the context of quantitative disclosures enables users to

link related disclosures and hence form an overall picture of the nature and extent of risks
arising from financial instruments. The interaction between qualitative and quantitative
disclosures contributes to disclosure of information in a way that better enables users to

evaluate the Company’s exposure to risks.
The Company is also exposed to financial risk through its financial assets and financial
liabilities. The most important components of the financial risks are credit risk, liquidity risk
and market risk.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the
basis of such credit risk characteristics as industry, past-due status and term.
Future cash flows in a group of financial assets that are collectively evaluated for impairment
are estimated on the basis of historical loss experience for assets with credit risk
characteristics similar to those in the group. Historical loss experience is adjusted on the basis
of current observable data to reflect the effects of current conditions that did not affect the
period on which the historical loss experience is based and to remove the effects of
conditions in the historical period that do not exist currently. The methodology and
assumptions used for estimating future cash flows are reviewed regularly by the Company to
reduce any differences between loss estimates and actual loss experience.
The Company first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant. If it is determined that no objective evidence
of impairment exists for an individual asset with similar credit risk characteristics and that
group of financial assets is collectively assessed for impairment. Assets that are individually
assessed for impairment and for which an impairment loss is on continues to be recognized
are not included in a collective assessment or impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognized, the
previously recognized impairment loss is reversed. Any subsequent reversal of an
impairment loss is recognized in the statements of income, to the extent that the carrying
value of the asset does not exceed its amortized cost at the reversal date.
Fair Value of Financial Assets and Liabilities
The carrying amounts and estimated fair values of the Company’s financial assets and
financial liabilities as of December 31, 2019 and 2018 are presented below :
2019 2018
Carrying Carrying
Fair Value Fair Value
Amount Amount
Financial Assets:
Cash P 14,764,559 P 14,764,559 P 8,078,617 P 8,078,617
Trade and other receivables 273,988,927 273,988,927 315,249,431 315,249,431
Investment 25,479,900 25,479,900 - -
P 314,233,386 P 314,233,386 P 323,328,048 P 323,328,048
Financial Liabilities:
Trade payables P 218,487,858 P 218,487,858 P 244,962,206 P 244,962,206
Loan payables 25,000,000 25,000,000 15,300,000 15,300,000
Due to stockholders 36,000,000 36,000,000 36,000,000 36,000,000
P 279,487,858 P 279,487,858 P 296,262,206 P 296,262,206
The fair values of financial assets and financial liabilities are determined as follows:
Due to the short-term nature financial assets and financial liabilities, their carrying amounts
approximate their fair values.

The Company’s principal financial instruments comprise of cash, trade and other receivables,
investment, trade payables, loan payables and advances from related parties. The main purpose
of these financial instruments is to finance for the Company’s operations and capital
expenditures.
It is, and has been throughout the year under review, the Company’s policy that no trading in
financial instruments shall be undertaken.
The main risks arising from the Company’s financial instruments are, credit risk, liquidity risk,
and capital risk. The Board of Directors reviews and agrees policies for managing each of
these risks and they are summarized below.
Credit Risk
At each reporting date, the Company shall assess whether the credit risk on a financial
instrument has increased significantly since initial recognition. When making the assessment,
the Company shall use the change in the risk of a default occurring over the expected life of the
financial instrument instead of the change in the amount of expected credit losses. To make that
assessment, the Company shall compare the risk of a default occurring on the financial
instrument as at the reporting date with the risk of a default occurring on the financial
instrument as at the date of initial recognition and consider reasonable and supportable
information, that is available without undue cost or effort, that is indicative of significant
increases in credit risk since initial recognition.
The Company may assume that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low credit
risk at the reporting date.
If reasonable and supportable forward-looking information is available without undue cost or

effort, the Company cannot rely solely on past due information when determining whether
credit risk has increased significantly since initial recognition. However, when information that
is more forward-looking than past due status (either on an individual or a collective basis) is not
available without undue cost or effort, the Company may use past due information to determine
whether there have been significant increases in credit risk since initial recognition. Regardless
of the way in which the Company assesses significant increases in credit risk, there is a
rebuttable presumption that the credit risk on a financial asset has increased significantly since
initial recognition when contractual payments are more than 30 days past due. The Company
can rebut this presumption if the Company has reasonable and supportable information that is
available without undue cost or effort, that demonstrates that the credit risk has not increased
significantly since initial recognition even though the contractual payments are more than 30
days past due. When the Company determines that there have been significant increases in
credit risk before contractual payments are more than 30 days past due, the rebuttable
presumption does not apply.
2019 2018
Financial Assets:
Cash P 14,764,559 P 8,078,617
Trade and other receivables 273,988,927 315,249,431
P 288,753,486 P 323,328,048
The Company does not hold any collateral or other credit enhancements to cover this credit
risk.
In addition, the Board of Directors (BOD)ensures that credit policies and procedures are
adequate to meet the demands of the business. The BOD also develops procedures to
streamline and expedite the processing of credit applications. It also designed the levels of
credit risk that the company accepts by putting a limit on the amount of risk accepted in relation
to a borrower or groups of borrowers. Such risks are monitored on a continuing basis and
subject to an annual or more frequent review.
Exposure to credit risk is managed through regular analysis of the ability of the borrowers and
potential borrowers to meet and interest and capital repayment obligations and by changing
these lending limits when appropriate.
Moreover, at the end of every reporting period, the Company reviews its credit policy
specifically regarding its collateral and other credit enhancements obtained based on the
following basic considerations:
When the Company obtains financial or non-financial assets during the period by taking
possession of collateral it holds as security or calling on other credit enhancements, and such
assets meet the recognition criteria, the Company discloses:(a) the nature and carrying amount
of the assets obtained; and (b) when the assets are not readily convertible into cash, its policies
for disposing of such assets or for using them in its operations.
The table below shows the credit quality by class of financial assets of the Company:
Neither Past Due nor Impaired
High Grade Medium Grade Low Grade Total

December 31, 2019:
Cash P 14,764,559 P - P - P 14,764,559
Trade and other receivables 185,296,072 88,301,601 391,255 273,988,928
P 200,060,631 P 88,301,601 P 391,255 P 288,753,487
December 31, 2018:
Cash P 8,078,617 P - P - P 8,078,617
Trade and other receivables 315,249,431 - - 315,249,431
P 323,328,048 P - P - P 323,328,048
To enable users of financial statements to assess the Company’s credit risk exposure and
understand its significant credit risk concentrations, the Company shall disclose, by credit risk
rating grades, the gross carrying amount of financial assets and the exposure to credit risk on
loan commitments and financial guarantee contracts. This information shall be provided
separately for financial instruments:
a) for which the loss allowance is measured at an amount equal to 12-month expected credit
losses;
b) for which the loss allowance is measured at an amount equal to lifetime expected credit
losses and that are:
 financial instruments for which credit risk has increased significantly since initial
recognition but that are not credit impaired financial assets; and
 financial assets that are credit-impaired at the reporting date (but that are not purchased or
originated credit-impaired);
a) that are purchased or originated credit-impaired financial assets.

The credit quality of the financial assets was determined as follows:
Contract and other receivables

 High grade – These are receivables from counterparties with more than 30 but not more
than 60 days overdue.
 Medium grade – These are receivables from counterparties with more than 61 days but
not more than 360 days overdue.
 Low grade – These are receivables from counterparties with more than 360 days overdue.
Cash, and trade and other receivables are classified as high grade due to high probability of
collection (the counterparty has the apparent ability to satisfy its obligation and is readily
enforceable).
Liquidity risk
The risk that the Company will encounter difficulty in meeting obligations associated with
financial liabilities that are settled by delivering cash or another financial asset.
Consideration payable to a customer includes cash amounts that the Company pays, or expects
to pay, to the customer (or to other parties that purchase the Company’s goods or services from
the customer). Consideration payable to a customer also includes credit or other items that can
be applied against amounts owed to the Company (or to other parties that purchase the
Company’s goods or services from the customer). The Company shall account for
consideration payable to a customer as a reduction of the transaction price and, therefore, of
revenue unless the payment to the customer is in exchange for a distinct good or service that
the customer transfers to the Company. If the consideration payable to a customer includes a
variable amount, the Company shall estimate the transaction price (including assessing whether
the estimate of variable consideration is constrained).
Requires the Company to disclose information that enables users of its financial statements to
evaluate the nature and extent of risk arising from financial instruments to which the Company
is exposed at the end of the reporting period. In the preparation of its financial statements, the
Company assesses whether information about the existence of the covenant and its terms is
material information, considering both the consequences and the likelihood of a breach
occurring.
In these circumstances, the Company concluded that, considering its recent liquidity problem,
any acceleration of the long-term loan repayment plan (the consequence of the covenant breach
occurring) would affect the Company’s financial position and cash flows in a way that could
reasonably be expected to influence primary users’ decisions.
The Company also considered the likelihood of a breach occurring.
The Company’s objective is to maintain a balance between continuity of funding and

flexibility. In managing liquidity risk, the Company monitors and maintains a level of cash
deemed adequate by the management to finance the Company's operations.
Liquidity or funding risk is the risk that the Company will encounter difficulty in raising funds
to meet commitments associated with financial instruments. Liquidity risk may result from
either the inability to sell financial assets quickly at their fair values; or counterparty failing on
repayment of contractual obligation; or inability to generate cash inflows as anticipated.
The Company maintains adequate highly liquid assets in the form of cash to assure necessary

liquidity.
The Company manages liquidity through a liquidity risk policy which determines what
constitutes liquidity risk for the Company; specifies minimum proportion of funds to meet
emergency calls; setting up contingency funding plans; specify the sources of funding and the
vents that would trigger the plan; concentration of funding sources; reporting of liquidity risk
exposures and breaches to the monitoring authority; monitoring compliance with liquidity risk
policy and review of liquidity risk policy for pertinence and changing environment.
The contractual maturity of the Company’s trade and other payables is generally within 30 to
90 days after the recognition of the liability.
Weighted
Within 1
Average
Year / On 1-5 Years Total
Effective
Demand
Interest Rate
December 31, 2019:
Trade and other payables P - P 218,487,858 P - P 218,487,858
Loan payables - 25,000,000 - 25,000,000
Due to stockholders - - 36,000,000 36,000,000
P - P 243,487,858 P 36,000,000 P 279,487,858
December 31, 2018:
Trade and other payables P - P 244,962,206 P - P 244,962,206
Loan payables - 15,300,000 - 15,300,000
Due to stockholders - - 36,000,000 36,000,000
P - P 260,262,206 P 36,000,000 P 296,262,206
Working capital management
The Company has minimal working capital requirements due to the short cash collection cycle
of its business. Working capital requirements are well within the credit facilities established
which are adequate and available to the Company to meet day-to-day liquidity and working
capital requirements. The credit facilities are regularly reviewed by the Treasury Group to
ensure that they meet the objectives of the Company.
2019 2018
Non-current liability
Due to stockholders P 36,000,000 P 36,000,000
Equity
Paid-up capital 71,000,000 51,000,000
P 107,000,000 P 87,000,000
7. CASH
This account consists of:

2019 2018
Cash in bank P 14,764,559 P 8,078,617
P 14,764,559 P 8,078,617
Cash in bank consists of savings and current deposits in reputable local banks that generally
earn interest at their respective deposit rate. Interest earned from cash in bank amounted to
P 109,910 in 2019 and P nil in 2018 presented as “Other income” (Note 23) in the statements
of comprehensive income.
8. TRADE AND OTHER RECEIVABLES

2019 2018
Accounts receivables P 278,275,201 P 314,885,804
Allowance for expected credit loss (4,677,529) -
Total 273,597,672 314,885,804
Due from officers and employees 391,255 363,627
P 273,988,927 P 315,249,431
Accounts receivable are non-interest bearing and generally on a 30-day term on majority of
clients but for some selected few term usually extend 60 to 90-day term.
Due from officers and employees consist of advances subject for liquidation and advances
which are collectible through salary deductions.
During the year, the Management determined that the estimated credit loss of receivables was
considered to be probable for non-collectability and allowance for credit losses was recorded.
No receivables have been pledged as a security for liabilities. Trade and other receivable are
non-interest bearing.
9. INVENTORIES

2019 2018
Construction materials P 48,330,959 P 41,581,845
P 48,330,959 P 41,581,845
This account consists mainly of purchased materials, fuel and lubricants used for business
operation.
Cost of inventories is generally determined using the moving-average method.
The cost of inventories recognized as expense and included in the “direct costs” amounted to
P557,711,755 and P426,907,984 in 2019 and 2018, respectively as disclosed in Note 22.
No impairment loss recognized or reversed in profit or loss and no portion of inventory have
been pledged as securities for liabilities.
10. OTHER CURRENT ASSETS

2019 2018
Input tax P 7,954,654 P 4,894,686
Deferred input VAT 3,175,119 3,058,459
Creditable withholding tax 533,863 1,614,445
P 11,663,636 P 9,567,590
Input tax represents value added tax (VAT) paid to suppliers that can be claimed as credit
against the Company’s VAT liabilities.
Deferred input VAT pertains to unamortized input VAT pertaining to capital assets exceeding
one (1) million pesos to be claimed against output tax.
Creditable withholding income tax pertains to 1%, 2% and 5% withholding tax withheld by
the customers.
11. PROPERTY, PLANT AND EQUIPMENT

Depreciation expense are accounted as follows:
Direct costs General and administrative
2019 2018 2019 2018
Transmit mixers P 5,275,660 P 5,339,473 P - P -
Service vehicles 2,804,806 3,109,851 - -
Plant and improvements - - 369,278 369,278
Test equipment 53,019 443,323 - -
P 8,133,485 P 8,892,647 P 369,278 P 369,278
Land is not depreciated. Depreciation on other items of property, plant and equipment is
computed on a straight-line method over the estimated useful lives of the assets as follows.
Transmit mixers 5-7 years

Service vehicles 6-7 years
Plant and improvements 10 years
Test equipment 5-7 years
Test equipment is fully depreciated and still in use in operations.
No impairment loss recognized or reversed in profit or loss and likewise no Property and
Equipment have been pledged as security for liabilities for the years ending 2019 and 2018.
12. INVESTMENT

2019 2018
Sun and Earth Homes Corp. P 17,200,000 P -
Sierra Madre Hydro Resources Corp. 5,279,900 -
GRC Motors Corp. 3,000,000 -
P 25,479,900 P -
This account represents shares of stocks acquired from non-listed corporations that are
passive and doesn’t have influence over the corporation.
13. DEFERRED TAX ASSET
This account pertains to the 30% of the recognized retirement obligation amounting to
P 1,565,711 (Note 18) for the year ended December 31, 2019 set aside for retirement of the
Company’s qualified employees.
14. TRADE PAYABLES

2019 2018
Accounts payable P 218,487,858 P 244,962,206
P 218,487,858 P 244,962,206
Accounts payable represents liabilities for goods purchased and are generally settled within a
short period of time normally payable in 30 days and are non-interest-bearing obligations.
15. LOANS PAYABLE
The account represents interest bearing loan granted to the Company by reputable bank.
Movements of this account are as follows:
2019 2018
Balance 12/31 P 15,300,000 P 60,000,000
Addional 83,000,000 76,300,000
Payments (73,300,000) (121,000,000)
P 25,000,000 P 15,300,000
16. OTHER CURRENT LIABILITIES

2019 2018
Output tax P 26,274,832 P 25,753,862
Withholding tax payable 350,857 245,868
Deferred output tax - 13,844,949
P 26,625,689 P 39,844,679
Output tax represents the 12% value added tax (VAT) received from the customer and to be
net to input tax to get the VAT payable. The said amount is to be remitted in the subsequent
month as prescribed by Bureau of Internal Revenue.
Withholding tax represents unremitted income taxes withheld from the salaries of employees
and creditable taxes withheld from source and expected to be remitted to BIR on the
following month of the reporting period.
17. DUE TO STOCKHOLDERS
Name and
Balance Written
designation of Additions Payment Current Non-Current Balance Dec.31,
Dec.31,2018 off
creditor 2019
Stockholders 36,000,000 - - - - 36,000,000 36,000,000
In the normal course of business, the Company has transactions with its stockholders for
additional working capital. These advances are non-interest bearing and payable for 5 years
as authorized and approved by the Board of Directors.
18. RETIREMENT PAYABLE
This account pertains to retirement benefits payable for those qualified employees who will
resign or retire in good standing amounting to P 5,219,036 for the year ended December 31,
2019.
19. SHARE CAPITAL

2019 2018
Authorized P 100,000,000 P 100,000,000
Subscribed 71,000,000 51,000,000
Par value 100 100
Paid-up P 71,000,000 P 51,000,000
The Company’s authorized capital stock is ONE HUNDRED MILLION PESOS

(P100,000,000) divided into ONE MILLION (1,000,000) shares with par value of ONE
HUNDRED PESOS (P 100.00) per share. The subscribed and paid-up share capital as of
December 31, 2019 equals 710,000 shares of common stock in the amount of P71,000,000.
During the year, the Company issued additional 200,000 shares in the amount of P20,000,000
for the additional subscription.
Schedule of capital stock:
Title of Number of Number of Number of Number Directors Others

issue shares shares issued Shares of Shares and (iii)
(i) Authorized and Reserved Held by Officers
outstanding at for Options, Related
shown under Warrants, Parties
related Conversion (ii)
Statement of and other
Financial Rights
Position
caption
Ordinary 1,000,000 710,000 - - 710,000 -
20. CUMULATIVE EARNINGS

2019 2018
Beginning balance P 39,026,919 P 35,604,149
Profit 5,346,676 3,422,770
Total 44,373,595 39,026,919
Appropriation - 5,000,000
Unappropriated - 34,026,919
Balance,12/31 P 44,373,595 P 39,026,919
21. SALES

2019 2018
Private P 649,083,326 P 514,298,873
P 649,083,326 P 514,298,873
Sales pertain to construction materials sold during the period.
22. DIRECT COSTS

2019 2018
Beginning inventory P 41,581,845 P 3,526,370
Add: Materials 564,460,869 464,963,459
Total materials available for use 606,042,714 468,489,829
Add: Labor (Note 25) 15,520,887 10,398,233
Depreciation (Note 11) 8,133,485 8,892,647
Overhead 7,948,019 6,966,241
Toll fees 2,565,332 3,815,774
Hauling 1,423,787 900,000
Pump rental 586,754 9,312,752
Repairs and maintenance 538,539 1,018,369
Total 642,759,517 509,793,845
Less: Ending inventory (Note 9) 48,330,959 41,581,845
P 594,428,558 P 468,212,000
Materials pertain to the purchased construction materials, fuel and lubricants.
23. OTHER INCOME

2019 2018
Rental revenue P 10,864,050 P 10,136,750
Interest income 109,910 -
P 10,973,960 P 10,136,750
Rental income pertains to income from the lease of construction equipment. The lease term
ranges only from one month to three months only.
24. GENERAL AND ADMINISTRATIVE EXPENSES

2019 2018
Repairs and maintenance P 12,710,680 P 16,016,058
Employees compensation and
other benefits (Note 25) 11,336,458 9,028,305
Retirement 5,219,036 -
Provision for expected credit loss 4,677,529 -

Light and water 4,834,393 4,396,309
Fuel and lubricants 3,304,836 4,799,689
Taxes and licenses (Note 33.1.f) 2,454,367 2,245,213
Commission 1,603,938 2,692,346
Testing fees 1,992,851 1,656,996
Securities and janitorial 1,180,332 920,376
Transporation and travel 631,811 1,250,607
Representations 522,693 1,350,355
Depreciation (Note 11) 369,278 369,278
Telecommunication 253,865 1,010,115
Professional fees 161,979 102,258
Rentals (Note 27) 69,643 142,929
Miscellaneous 2,654,032 4,357,729
P 53,977,721 P 50,338,563
Repairs and maintenance represent the cost incurred to bring an asset back to an earlier
condition or to keep the asset operating at its present condition (as opposed to improving the
asset).
Light and water pertains to electricity and water consumption during the period.
Expenses included under the caption “Miscellaneous” consists of various insignificant

amount and are normal administrative expenses.
25. EMPLOYEES’ COMPENSATION AND OTHER BENEFITS
The short-term employee benefits received by the Company’s employees are as follows:

Direct cost General and administrative
2019 2018 2019 2018
Salaries and wages P 14,317,856 9,530,609 P 10,485,529 8,327,239
SSS/HDMF/PHIC expense 1,203,031 867,624 850,929 701,066
P 15,520,887 10,398,233 P 11,336,458 9,028,305
26. FINANCE COSTS

2019 2018
Finance costs P 2,035,917 P 995,388
P 2,035,917 P 995,388
Finance cost represents interest expense of the Company pertaining to their loans (Note 15).
27. LEASE
Operating Lease – Company as Lessee
The Company leases its office from Genricland Properties, Inc. The lease agreement is for
initial term of one year and, in most cases, provide for rental escalations and renewal options.
The total rent expense in the amount of P69,643 in 2019 and P142,929 in 2018 (see Note 24)
are part of the total rent expense of the Company included under “General and Administrative
Expense” in the Statements of Comprehensive Income.
At the balance sheet date, the Company had outstanding commitments for future minimum
lease payments under renewable annually operating leases, which fall due as follows:
2019 2018
One year after P 69,643 P 142,929
More than one year to five years - -
More than five years - -
P 69,643 P 142,929
28. INCOME AND OTHER TAXES
Income tax expense for the year ended December 31 consists of:

2019 2018
Current P 5,834,125 P 1,466,902
Defered (1,565,711) -
P 4,268,414 P 1,466,902
The reconciliation of the income tax expense computed at statutory tax rate and the income
tax liability for the current period is as follows:
2019 2018
Net profit before income tax P 9,615,090 P 4,889,672
Temporary difference:
Retirement 5,219,036 -
Provision for ECL 4,677,529 -
Permanent differences:
Income already subjected to income tax (109,910) -
Interest expense 45,338 -
Net taxable income 19,447,083 4,889,672
Income tax expense at statutory rate @30% 5,834,125 1,466,902
Income tax due for the year 5,834,125 1,466,902
Less: Tax payments/credit
Prior year excess credit 2,044,883 309,592
Tax paid 1st-3rd quarter - 110,159
Creditable tax 1st-3rd quarter 2,684,505 1,840,471
Creditable tax 4th quarter 2,069,039 1,251,563
Income tax payable P (964,302) P (2,044,883)
2019 2018
Gross income P 65,518,819 P 56,223,623
MCIT rate 2% 2%
P 1,310,376 P 1,124,472
For the year ended December 31, 2019, the Company elected to claim itemized deductions
instead of the OSD.
29. RELATED PARTY DISCLOSURES

Outstanding
balance
Category/ Amount of Due to related

Year Terms Conditions
Transaction transaction parties
2019
36,000,000
Non-interest Unsecured, no
Advances from - bearing impairment
stockholders
2018 36,000,000
36,000,000 Non-interest Unsecured, no
bearing impairment
Total 2019 - 36,000,000
Total 2018 36,000,000 36,000,000

Remuneration of Key Management
The Company does not provide remuneration of its key management personnel and directors.
30. EARNINGS PER SHARE
2019 2018
Net income P 5,346,676 P 3,422,770
Divided by the weighted average
number of shares outstanding 71,000,000 51,000,000
P 0.08 P 0.07
31. AMENDMENTS
As authorized and approved by the Board, the following accounts have been amended for fair

presentation of financial statements for the year ended December 31 2019.
Increase/
Original (decrease) Amended
Current asset
Trade and other receivable 278,275,201 278,275,201
Allowances for ECL 4,677,529 (4,677,529)
Total 278,275,201 4,677,529 273,597,672
Non-current asset
Deferred tax asset - 1,565,711 1,565,711
Total - 1,565,711 1,565,711
Non-current liability
Retirement payable - 5,219,036 5,219,036
Total - 5,219,036 5,219,036
Equity
Cumulative earnings 52,704,449 (8,330,854) 44,373,595
Total 52,704,449 (8,330,854) 44,373,595
32. EVENTS AFTER THE REPORTING PERIOD
There were no events that require adjustment or disclosure between the reporting date and the
date of issuance of the amended audited financial statements.
The amended financial statements of the Company for the years ended December 31, 2019
and 2018 were approved by management and authorized for issue by the board of directors
on October 29, 2020.
33. SUPPLEMENTARY TAX INFORMATION UNDER REVENUE REGULATION NO.

15-2010 AND 19-2011
33.1 On November 25, 2010, The Bureau of Internal Revenue (BIR) issued Revenue
Regulation (RR) 15-2010, which required certain information on taxes, duties and license
fees paid or accrued during taxable year to be disclosed as part of the notes to financial
statements. This supplemental information, which is an addition to the disclosures mandated
under PFRS, is presented as follows:
(a) Output VAT

Sales Output tax
Vatable sales P 659,947,376 P 79,193,685
P 659,947,376 P 79,193,685
(b) Input VAT

Beginning balance P 4,894,686
Capital goods subject to amortization 1,503,203
Purchase of Capital Goods Exceeding P1M 931,071
Domestic purchase of goods other than capital goods 70,802,728
Domestic purchase of service 853,195
Deferred input VAT (1,619,862)
Input tax applied against output tax (69,410,367)
P 7,954,654
(c) Taxes on importation
The Company does not have taxes on importation in 2019.
(d) Excise tax
The Company does not have excise tax in 2019 since it does not have any transaction subject
to excise tax.
(e) Documentary stamp tax
The Company has documentary stamp tax paid amounted to 437,730 in 2019.
(f) Taxes and licenses
The details of total taxes and licenses that are presented as general and administrative
expenses for the year ended December 31, 2019 are shown below:
Business permit P 1,772,228

Documentary stamp tax 437,730
Real property tax 222,909
BIR annual registration 500
Others 21,000
P 2,454,367
(g) Withholding taxes
The details of total withholding taxes for the year ended December 31, 2019 are shown
below:
Paid Accrued
Withholding tax - compensation P 255,499 P 6,615
Withholding tax - expanded 5,486,089 344,242
P 5,741,587 P 350,857
The Company has no income payments subject to final withholding tax.

(h)Deficiency tax assessment and tax cases
The Company does not have any deficiency tax assessment with the BIR or tax cases
outstanding and pending before the courts or bodies outside of BIR in any of the open years.
33.2 The amounts of taxable revenues and income, and deductible costs and expenses
presented below are based on relevant tax regulations issued by the BIR, hence, may not
be the same as the amounts reflected in the 2019 statement of income.
(a) Taxable revenues
The Company’s taxable revenues for the year ended December 31, 2019 subject to regular
tax rate regime is presented below:
Revenue P 649,083,326
P 649,083,326
(b) Deductible direct costs
The deductible cost of goods manufactured for the year ended December 31, 2019 under
regular tax rate:
Beginning inventory P 41,581,845

Add: Materials 564,460,869
Total materials available for use 606,042,714
Add: Labor (Note 25) 15,520,887
Depreciation (Note 11) 8,133,485
Overhead 7,948,019
Toll fees 2,565,332
Hauling 1,423,787
Pump rental 586,754
Repairs and maintenance 538,539
Total 642,759,517
Less: Ending inventory (Note 9) 48,330,959
P 594,428,558
(c) Taxable non-operating and other income
The Company’s taxable non-operating and other income amounted to P10,864,050 in 2019.

(d) Regular itemized allowable deduction
Regular itemized allowable deduction for the year ended December 31, 2019 under regular
tax rate comprises the following:
Repairs and maintenance P 12,710,680

Employees compensation and
other benefits (Note 25) 11,336,458
Light and water 4,834,393
Fuel and lubricants 3,304,836
Taxes and licenses (Note 33.1.f) 2,454,367
Finance cost 1,990,579
Commission 1,603,938
Testing fees 1,992,851
Securities and janitorial 1,180,332
Transporation and travel 631,811
Representations 522,693
Depreciation (Note 11) 369,278
Telecommunication 253,865
Professional fees 161,979
Rentals 69,643
Miscellaneous 2,654,032
P 46,071,735

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SUN AND EARTH CORPORATION

NOTES TO THE FINANCIAL STATEMENTS-AMENDED

2. BASIS OF PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS

SUN AND EARTH CORPORATION Page 1 of 56

(Effective for annual periods beginning on or after January 1, 2019)

Amendments to Prepayment Features with Negative Compensation

Annual Makes amendments to the following standards:

IAS 1 Classification of liabilities

Primary financial statements

IAS 8 Accounting policies and accounting estimates

Accounting policy changes

IAS 16 Proceeds before intended use

SUN AND EARTH CORPORATION Page 3 of 56

To gather evidence for this research project, the IASB is planning to

IAS 28 Equity method

IAS 32 Financial instruments with characteristics of equity

IAS 36 Goodwill and impairment

Pollutant pricing mechanisms

IAS 39 Dynamic risk management

IAS 41 Cash flows from taxation

IFRS 1 Adoption by a subsidiary

SUN AND EARTH CORPORATION Page 4 of 56

IFRS 3 Intangible assets, goodwill and impairment

Business combinations under common control

Updating a Reference to the Conceptual Framework

IFRS 5 Post-implementation review

IFRS 6 Extractive activities

IFRS 8 Post-implementation Review

IFRS 9 Dynamic risk management

IFRS 10, 11, and 12 Post-implementation review

IFRS 14 Rate-regulated Activities

SUN AND EARTH CORPORATION Page 5 of 56

IFRS 17 Stakeholder concerns and implementation challenges

IFRIC 14 Availability of a refund

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Trade and other receivables

A receivable is Company’s right to consideration that is unconditional. A right to consideration is

SUN AND EARTH CORPORATION Page 6 of 56

Other current assets

Property and equipment-net

The cost of an item of property, plant and equipment may comprise:

SUN AND EARTH CORPORATION Page 7 of 56

SUN AND EARTH CORPORATION Page 8 of 56

Deferred tax asset

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Income tax payable

A contractual obligation to deliver financial instruments is itself a financial instrument. A chain of

SUN AND EARTH CORPORATION Page 10 of 56

Other current liabilities

A contractual obligation to deliver financial instruments is itself a financial instrument. A chain of

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Distributions to holders of an equity instrument shall be recognized by the Company directly in

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The recognition of income occurs at the same time as:

SUN AND EARTH CORPORATION Page 13 of 56

SUN AND EARTH CORPORATION Page 14 of 56

Cost and expense recognition

The recognition of expenses occurs at the same time as: