Q & a - Review of Chart of Accounts - Philippines
1
Review of Chart of Accounts – Philippines
Questions and Suggested Answers
1. In China GAAP, the bonds or stocks purchased are categorized as "Held-for-trading" or "Available for sale" or "Long term investment", based on the purpose of purchase. Does Philippine GAAP have similar categorization? Philippine client want to separate the marketable securities to current or non-current, it means short or long term, right? Answer: The Philippine Financial Reporting Standards (PFRS) [based from International Financial Reporting Standards (IFRS)] classifies “Investment in Bonds” and “Investments in Stocks” as financial assets. For this purpose, investments in bonds or stocks are classified as: Trading securities (debt or equity securities) o o “Financial assets at fair value through profit or loss” by requirement “Financial assets at fair value through profit or loss” by designation
Available-for-sale securities (debt or equity securities) Held-to-maturity securities (debt securities only)
These investments are classified as either current (short-tem) or noncurrent (long-term) assets. The account name “Long-term investment” is not among the financial assets classification in PFRS. Current investments are investments that are by their very nature are readily realizable and are intended to be held for not more than one year.
Debt Trading securities Available-forsale √ √
Equity √ √
Current √
Noncurrent
Current or Noncurrent
√ - Maybe classified as current or noncurrent depending on whether they are intended to be held within one year or for more than one year √
Held-tomaturity
√
2
For instance, trading securities are normally classified as current assets because these investments are expected to be realized within twelve (12) of the balance sheet date. Noncurrent financial assets are investments other than current investments. This residual definition means that the noncurrent investments are intended to be held for more than one year or are not expected
Review of Chart of Accounts – Philippines
Questions and Suggested Answers
1. In China GAAP, the bonds or stocks purchased are categorized as "Held-for-trading" or "Available for sale" or "Long term investment", based on the purpose of purchase. Does Philippine GAAP have similar categorization? Philippine client want to separate the marketable securities to current or non-current, it means short or long term, right? Answer: The Philippine Financial Reporting Standards (PFRS) [based from International Financial Reporting Standards (IFRS)] classifies “Investment in Bonds” and “Investments in Stocks” as financial assets. For this purpose, investments in bonds or stocks are classified as: Trading securities (debt or equity securities) o o “Financial assets at fair value through profit or loss” by requirement “Financial assets at fair value through profit or loss” by designation
Available-for-sale securities (debt or equity securities) Held-to-maturity securities (debt securities only)
These investments are classified as either current (short-tem) or noncurrent (long-term) assets. The account name “Long-term investment” is not among the financial assets classification in PFRS. Current investments are investments that are by their very nature are readily realizable and are intended to be held for not more than one year.
Debt Trading securities Available-forsale √ √
Equity √ √
Current √
Noncurrent
Current or Noncurrent
√ - Maybe classified as current or noncurrent depending on whether they are intended to be held within one year or for more than one year √
Held-tomaturity
√
2
For instance, trading securities are normally classified as current assets because these investments are expected to be realized within twelve (12) of the balance sheet date. Noncurrent financial assets are investments other than current investments. This residual definition means that the noncurrent investments are intended to be held for more than one year or are not expected
References: Conceptual Framework of Accounting PAS 1: Presentation of Financial Statements PAS 16 (Revised) – Property, Plant and Equipment PAS 24 (Revised) – Related Party Disclosures PAS 32: Financial Instruments: Presentation PAS 38 – Intangible Assets PAS 39: Financial Instruments: Recognition and Measurement PFRS 7: Financial Instruments: Disclosures Philippine Practice ***NOTHING FOLLOWS***