Summary of IAS 10 Key Definitions Event after the reporting period: An event, which could be favorable or unfavorable, that

occurs between the end of the reporting period and the date that the financial statements are authorized for issue. [IAS 10.3] Adjusting event: An event after the reporting period that provides further evidence of conditions that existed at the end of the reporting period, including an event that indicates that the going concern assumption in relation to the whole or part of the enterprise is not appropriate. [IAS 10.3] Non-adjusting event: An event after the reporting period that is indicative of a condition that arose after the end of the reporting period. [IAS 10.3] Accounting Adjust financial statements for adjusting events - events after the balance sheet date that provide further evidence of conditions that existed at the end of the reporting period, including events that indicate that the going concern assumption in relation to the whole or part of the enterprise is not appropriate. [IAS 10.8] Do not adjust for non-adjusting events - events or conditions that arose after the end of the reporting period. [IAS 10.10] If an entity declares dividends after the reporting period, the entity shall not recognize those dividends as a liability at the end of the reporting period. That is a non-adjusting event. [IAS 10.12] Going Concern Issues Arising After End of the Reporting Period An entity shall not prepare its financial statements on a going concern basis if management determines after the end of the reporting period either that it intends to liquidate the entity or to cease trading, or that it has no realistic alternative but to do so. [IAS 10.14] Disclosure Non-adjusting events should be disclosed if they are of such importance that nondisclosure would affect the ability of users to make proper evaluations and decisions. The required disclosure: the nature of the event; an estimate of its financial effect or a statement that a reasonable estimate of the effect cannot be made. [IAS 10.21] A company should update disclosures that relate to conditions that existed at the end of the reporting period to reflect any new information that it receives after the reporting period about those conditions. [IAS 10.19] Companies must disclose the date when the financial statements were authorized for issue and who gave that authorization. If the enterprise's owners or others have the power to amend the financial statements after issuance, the enterprise must disclose that fact. [IAS 10.17]

Objective of IAS 11 The objective of IAS 11 is to prescribe the accounting treatment of revenue and costs associated with construction contracts. What Is a Construction Contract? A construction contract is a contract specifically negotiated for the construction of an asset or a group of interrelated assets. [IAS 11.3] Under IAS 11, if a contract covers two or more assets, the construction of each asset should be accounted for separately if (a) separate proposals were submitted for each asset, (b) portions of the contract relating to each asset were negotiated separately, and (c) costs and revenues of each asset can be measured. Otherwise, the contract should be accounted for in its entirety. [IAS 11.8] Two or more contracts should be accounted for as a single contract if they were negotiated together and the work is interrelated. [IAS 11.9] If a contract gives the customer an option to order one or more additional assets, construction of each additional asset should be accounted for as a separate contract if either (a) the additional asset differs significantly from the original asset(s) or (b) the price of the additional asset is separately negotiated. [IAS 11.10] What Is Included in Contract Revenue and Costs? Contract revenue should include the amount agreed in the initial contract, plus revenue from alternations in the original contract work, plus claims and incentive payments that (a) are expected to be collected and (b) that can be measured reliably. [IAS 11.11] Contract costs should include costs that relate directly to the specific contract, plus costs that are attributable to the contractor's general contracting activity to the extent that they can be reasonably allocated to the contract, plus such other costs that can be specifically charged to the customer under the terms of the contract. [IAS 11.16] Accounting If the outcome of a construction contract can be estimated reliably, revenue and costs should be recognized in proportion to the stage of completion of contract activity. This is known as the percentage of completion method of accounting. [IAS 11.22] To be able to estimate the outcome of a contract reliably, the entity must be able to make a reliable estimate of total contract revenue, the stage of completion, and the costs to complete the contract. [IAS 11.23-24] If the outcome cannot be estimated reliably, no profit should be recognized. Instead, contract revenue should be recognized only to the extent that contract costs incurred are expected to be recoverable and contract costs should be expensed as incurred. [IAS 11.32] The stage of completion of a contract can be determined in a variety of ways - including the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, surveys of work performed, or completion of a physical proportion of the contract work. [IAS 11.30]. An expected loss on a construction contract should be recognized as an expense as soon as such loss is probable. [IAS 11.22 and 11.36] Disclosure amount of contract revenue recognized; [IAS 11.39(a)] method used to determine revenue; [IAS 11.39(b)] method used to determine stage of completion; [IAS 11.39(c)] and for contracts in progress at balance sheet date: [IAS 11.40] aggregate costs incurred and recognized profit amount of advances received amount of retentions

Presentation The gross amount due from customers for contract work should be shown as an asset. [IAS 11.42] The gross amount due to customers for contract work should be shown as a liability. [IAS 11.42]

Objective of IAS 12 The objective of IAS 12 (1996) is to prescribe the accounting treatment for income taxes. Key Definitions [IAS 12.5] Temporary difference a difference between the carrying amount of an asset or liability and its tax base. Taxable temporary difference a temporary difference that will result in taxable amounts in the future when the carrying amount of the asset is recovered or the liability is settled. Deductible temporary difference a temporary difference that will result in amounts that are tax deductible in the future when the carrying amount of the asset is recovered or the liability is settled. Current Tax Current tax for the current and prior periods should be recognized as a liability to the extent that it has not yet been settled, and as an asset to the extent that the amounts already paid exceed the amount due. [IAS 12.12] The benefit of a tax loss which can be carried back to recover current tax of a prior period should be recognized as an asset. [IAS 12.13] Current tax assets and liabilities should be measured at the amount expected to be paid to (recovered from) taxation authorities, using the rates/laws that have been enacted or substantively enacted by the balance sheet date. [IAS 12.46] Recognition of Deferred Tax Liabilities The general principle in IAS 12 is that deferred tax liabilities should be recognized for all taxable temporary differences. There are three exceptions to the requirement to recognize a deferred tax liability, as follows: [IAS 12.15] liabilities arising from initial recognition of goodwill for which amortisation is not deductible for tax purposes; liabilities arising from the initial recognition of an asset/liability other than in a business combination which, at the time of the transaction, does not affect either the accounting or the taxable profit; and liabilities arising from undistributed profits from investments where the entity is able to control the timing of the reversal of the difference and it is probable that the reversal will not occur in the foreseeable future. [IAS 12.39] Recognition of Deferred Tax Assets A deferred tax asset should be recognized for deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised, unless the deferred tax asset arises from: [IAS 12.24] the initial recognition of an asset or liability other than in a business combination which, at the time of the transaction, does not affect the accounting or the taxable profit. Deferred tax assets for deductible temporary differences arising from investments in subsidiaries, associates, branches and joint ventures should be recognized to the extent that it is probable that the temporary difference will reverse in the foreseeable future and that taxable profit will be available against which the temporary difference will be utilised. [IAS 12.44] The carrying amount of deferred tax assets should be reviewed at the end of each reporting period and reduced 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 utilised. Any such reduction should be subsequently reversed to the extent that it becomes probable that sufficient taxable profit will be available. [IAS 12.37]

A deferred tax asset should be recognized for an unused tax loss carryforward or unused tax credit if, and only if, it is considered probable that there will be sufficient future taxable profit against which the loss or credit carryforwards can be utilised. [IAS 12.34]

Measurement of Deferred Tax Assets and Liabilities Deferred tax assets and liabilities should be measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled (liability method), based on tax rates/laws that have been enacted or substantively enacted by the end of the reporting period. [IAS 12.47] The measurement should reflect the entity's expectations, at the balance sheet date, as to the manner in which the carrying amount of its assets and liabilities will be recovered or settled. [IAS 12.51] Deferred tax assets and liabilities should not be discounted. [IAS 12.53] Recognition of Tax Expense or Income Current and deferred tax should be recognized as income or expense and included in profit or loss for the period, except to the extent that the tax arises from: [IAS 12.58] a transaction or event that is recognized directly in equity; or a business combination accounted for as an acquisition. If the tax relates to items that are credited or charged directly to equity, the tax should also be charged or credited directly to equity. [IAS 12.61] If the tax arises from a business combination that is an acquisition, it should be recognized as an identifiable asset or liability at the date of acquisition in accordance with IFRS 3 Business Combinations (thus affecting goodwill). Tax Consequences of Dividends In some jurisdictions, income taxes are payable at a higher or lower rate if part or all of the net profit or retained earnings is paid out as a dividend. In other jurisdictions, income taxes may be refundable if part or all of the net profit or retained earnings is paid out as a dividend. Possible future dividend distributions or tax refunds should not be anticipated in measuring deferred tax assets and liabilities. [IAS 12.52A] IAS 10 Events after the Reporting Period, requires disclosure, and prohibits accrual, of a dividend that is proposed or declared after the end of the reporting period but before the financial statements were authorised for issue. IAS 12 requires disclosure of the tax consequences of such dividends as well as disclosure of the nature and amounts of the potential income tax consequences of dividends. [IAS 12.82A] Presentation Current tax assets and current tax liabilities should be offset on the balance sheet only if the entity has the legal right and the intention to settle on a net basis. [IAS 12.71] Deferred tax assets and deferred tax liabilities should be offset on the balance sheet only if the entity has the legal right to settle on a net basis and they are levied by the same taxing authority on the same entity or different entities that intend to realise the asset and settle the liability at the same time. [IAS 12.74] Disclosure In addition to the disclosures required by IAS 12, some disclosures relating to income taxes are required by IAS 1, as follows: IAS 1 requires disclosures on the face of the statement of financial position about current tax assets, current tax liabilities, deferred tax assets, and deferred tax liabilities [IAS 1.54(n) and (o)] IAS 1 requires disclosure of tax expense (tax income) on the face of the statement of comprehensive income [IAS 1.82(d)]. IAS 12 requires disclosure of tax expense (tax income) relating to ordinary activities on the face of the statement of comprehensive income [IAS 12.77].

IAS 12 requires that if an entity presents a statement of income, in addition to a statement of comprehensive income, tax expense (income) from ordinary activities should be presented in the statement of income. [IAS 12.77A] IAS 12.80 requires the following disclosures: major components of tax expense (tax income) [IAS 12.79] Examples include: current tax expense (income) any adjustments of taxes of prior periods amount of deferred tax expense (income) relating to the origination and reversal of temporary differences amount of deferred tax expense (income) relating to changes in tax rates or the imposition of new taxes amount of the benefit arising from a previously unrecognized tax loss, tax credit or temporary difference of a prior period write down, or reversal of a previous write down, of a deferred tax asset amount of tax expense (income) relating to changes in accounting policies and corrections of errors IAS 12.81 requires the following disclosures: aggregate current and deferred tax relating to items reported directly in equity tax relating to each component of other comprehensive income explanation of the relationship between tax expense (income) and the tax that would be expected by applying the current tax rate to accounting profit or loss (this can be presented as a reconciliation of amounts of tax or a reconciliation of the rate of tax) changes in tax rates amounts and other details of deductible temporary differences, unused tax losses, and unused tax credits temporary differences associated with investments in subsidiaries, associates, branches, and joint ventures for each type of temporary difference and unused tax loss and credit, the amount of deferred tax assets or liabilities recognized in the statement of financial position and the amount of deferred tax income or expense recognized in the income statement tax relating to discontinued operations tax consequences of dividends declared after the end of the reporting period Other required disclosures: details of deferred tax assets [IAS 12.82] tax consequences of future dividend payments [IAS 12.82A]

Philippine Accounting Standard 10 Events after Reporting Period

Philippine Accounting Standard 11 Construction Contracts

Philippine Accounting Standard 12 Income Taxes

Philippine Accounting Standard 13 Presentation of Current Assets and Current Liabilities