VETERANS FEDERATION OF THE PHILIPPINES

Notes to Financial Statements

(With Corresponding Figures for 2014)
(In Philippine Peso)

1. Summary of Significant Accounting Policies

1.1 Basis of Measurement

The accompanying Financial Statements have been prepared on a historical cost

basis.

1.2 Statement of Compliance

The Financial Statements have been prepared in accordance with the Philippine
Financial Reporting Standard for Small and Medium-Sized Entities (SMEs) issued
by the Philippine Financial Reporting Standard Council.

1.3 Functional and Presentation Currency

The Financial Statement is presented in Philippine Peso, the Federation’s

functional currency.

1.4 Use of Accounting Judgment and Estimates

The preparation of the Financial Statements in the Philippine Financial Reporting

Standards for SMEs requires the Management of the federation to make estimates
and assumptions that affect the amount reported in the Financial Statements and
accompanying notes. Future events may occur which will cause the assumption
used in arriving at estimates to change. The effects of changes in estimates will be
reflected in the Financial Statements as they become reasonably determinable.
The key assumptions concerning the future and other key sources of estimation
uncertainty at the balance sheet date that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.

Estimated useful life of Property, Plant and Equipment – The Federation estimated
the useful lives of Property, Plant and Equipment based on the period over which
the Property, Plant and Equipment are expected to be available for use and on the
collective assessment of industry practice, internal technical evaluation and
experience with similar assets. The estimated useful lives of Property, Plant and
Equipment are reviewed periodically and updated if expectations differ from
previous estimates due to physical wear and tear, technical or commercial
obsolescence and legal or other limits in the use of the Property, Plant and
Equipment and Investment Properties. However, it is possible that future result
of operations could be materially affected by changes in estimates brought by
changes in the factor mentioned above. The amount and timing of recording the
depreciation for any period would be affected by the changes in these factors and
circumstances.

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 A reduction in the estimated useful lives of the Property, Plant and Equipment
would increase the recorded Depreciation and decrease the Non-Current Assets.

1.5 Cash and Cash Equivalents

Cash comprised cash on hand and demand deposits. Cash Equivalents are short
term highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of change in value.

1.6 Trade and Other Receivables

The Accounts Receivable pertains to the uncollected rentals from Veterans

Federation of the Philippines – Industrial Complex (VFP-IC) tenants. In accordance
with the New Government Accounting System, allowance for doubtful accounts
shall be set up to allow fair value of receivables. For calendar year 2015, VFP was
not able to provide the allowance due to inadequate previous years’ records.
However, appropriate doubtful accounts will be provided immediately after the
retrieval of necessary accounting records.

1.7 Prepayments

Prepayments include items of goods or services purchased by the federation for

use in its operations but not fully consumed at the end of the accounting period.

1.8 Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, excluding the cost of day to day
servicing less Accumulated Depreciation, Amortization and Impairment in Value.

The initial cost of Property, Plant and Equipment except Land consist of its
purchase price and other costs directly attributable in bringing the assets to its
working condition and location for intended use. Expenditures incurred after the
Property, Plant and Equipment have been put into operation, such as repairs and
maintenance are normally charged to expenses in the year in which the costs are
incurred. In situations where it can be clearly demonstrated that expenditures have
resulted in an increase in the future economic benefits expected to be obtained
from the use of an item of property, plant and equipment beyond its originally
assessed standard of performance, the expenditures are capitalized as additional
cost of Property, Plant and Equipment.

By virtue of Presidential Proclamation No. 192 dated April 4, 1967, VFP recognized
the value of 50 hectares land in the Veterans Center Taguig using zonal value of
PhP 20,000.00 per square meter reference to the measurement by Bureau of
Internal Revenue.

Depreciation and Amortization are calculated on a straight-line basis over the

estimated useful lives of the assets.

Building 20 years Office Equipment/ Furnitures 5 years

Condominium Units 30 years Motor Vehicles 7 years

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 The useful lives, depreciation and amortization method are reviewed periodically to
ensure that the periods and methods of depreciation and amortization are
consistent with the expected pattern of economic benefits from items of property,
plant and equipment. If there is an indication that there has been a significant
change in useful life or residual value of an asset, the depreciation of that asset is
revised prospectively to reflect the new expectations.

1.9 Intangible Assets

Intangible Assets shall be carried at cost less any accumulated amortization and
any accumulated impairment loss.

1.10 Impairment of Non-Financial Assets

The federation assesses at each reporting date whether a non-financial asset may
be impaired. If any such indications exist, or when annual impairment testing is
required, the federation makes an estimate of the asset’s recoverable amount. An
asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair
value less cost to sell and its value in use and is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent of
those from other assets or group of assets. When carrying amount of asset
exceeds its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessment of the time value of money and the risks
specific to the asset. The calculations are corroborated by valuation multiple or
other available fair value indicators.

Impairment losses of assets are recognized in the statement of income in those

expense categories consistent with the function of the impaired asset. An
assessment is made at each reporting date as to whether there is any indication
that previously recognized impairment losses may no longer exist or may have
decreased. If such indication exists, the recoverable amount is estimated. A
previously recognized loss is reversed 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 that is the case, the carrying amount of the
asset is increased to its recoverable amount. That increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognized for the asset in prior years. Such reversal
is recognized in the federation's statement of income.

1.11 Trade and Other Payables

Economic obligations arising from purchase of goods and services and those
incurred for the necessary operations of the business are classified under Trade
and Other Payable.

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1.12 Revenue Recognition

Revenue is recognized to the extent that economic benefits associated with the
transaction will flow to the federation and the amount of revenue can be measured
reliably.

1.13 Employee Benefit Costs

Short term employee benefits include items such as:

(a) Social Security, Philippine Health Insurance and PAGIBIG benefits; and

(b) Non-monetary benefits (medical care, housing, skill upgrade, rice/meal,

transportation and others) for current employees.

1.14 Contingencies

Contingent Liabilities are not recognized in the Financial Statements but disclosed
unless the possibility of an outflow of resources embodying economic benefits is
probable.

A Contingent Asset is not recognized in the Financial Statements but disclosed

when an inflow of economic benefits is probable.

1.15 Subsequent Events

Subsequent Events that provide evidence of conditions that existed at balance

sheet date are reflected in the parent company financial statements. Subsequent
Events are indicative of conditions that arose after balance sheet date is disclosed
in the financial statements when material.

1.16 Income Taxes

Current tax assets or liabilities comprise those claims from, or obligations to, fiscal
authorities relating to the current or prior reporting period, that are uncollected or
unpaid at the balance sheet date. They are calculated according to the tax rates
and tax laws applicable to the fiscal periods to which they relate, based on the
taxable profit for the year. All changes to current tax assets or liabilities are
recognized as a component of tax expense in the income statement. Deferred tax
is provided, using the balance sheet liability method on temporary differences at
the balance sheet date between the tax base of assets and liabilities and their
carrying amounts for financial reporting purposes. Under the balance sheet liability
method with certain exceptions, deferred tax liabilities are recognized for all taxable
temporary differences and deferred tax assets are recognized for all deductible
temporary differences and the carry forward of unused tax losses and unused tax
credits to the extent that is probable that taxable profit will be available against
which the deferred income tax asset can be utilized.

The carrying amount of deferred tax assets is reviewed at each balance sheet date
and reduced to the extent that it is probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilized.

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 Deferred tax assets and liabilities are measured at the tax rates that are expected
to be applied 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
at the balance sheet date. Most changes in deferred tax assets or liabilities are
recognized as a component of tax expense in the income statement. Only changes
in deferred tax assets or liabilities that relate to a change in value of assets or
liabilities that is charged directly to equity are charged or credited directly to equity.

2. Transition to PFRS for SMEs

The PFRS for SMEs were adopted on October 13, 2009 by the Philippine Financial
Reporting Standards Council from the International Financial Reporting Standards
(IFRS) for Small and Medium Entities (SMEs) issued by the International Accounting
Standards Board. In the PFRS for SMEs, many of the principles in Full Philippine
Financial Reporting Standards (PFRS) for recognizing and measuring assets, liabilities
and income and expenses have been simplified, topics that are not relevant to SMEs
have been omitted, and the required disclosures have been significantly reduced. As the
PFRS for SMEs is a stand-alone standard, it includes sections on the concept and
pervasive principles that underline the Financial Statements of SMEs. These concepts
address various issues including the objective of financial statements SMEs, the
qualitative characteristics of information contained in those financial statements and
general recognition and measurement principles.

3. Rental Income

PARTICULAR 2015 2014

Rental Income from VFP Industrial Complex 193,721,976 177,894,449

4. Other Income

PARTICULAR 2015 2014

Condo Rentals/VFP Stalls Income 267,992 246,747
Road Users Fee/Stickers /IDs/Membership
Share 2,984,153 2,820,774
Interest Income 477,452 488,940
Miscellaneous Income 2,192,904 336,119
Total Other Income 5,922,501 3,892,580

5. General and Administrative Expenses

PARTICULAR 2015 2014

Salaries and Wages-Regular 6,778,069 7,369,240
Allowance of Officers 6,459,332 7,948,646
Bonuses of Officers and Employees 5,692,096 5,114,403
Security Services 5,276,096 4,958,084
Transportation and Travel 4,461,390 3,602,322

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 PARTICULAR 2015 2014
Burial Assistance 4,044,000 1,030,000
Veterans' Events 3,955,628 4,671,559
Representation Expense 3,225,590 204,256
Honoraria 2,974,940 0
Office Supplies Expense 2,694,818 2,095,374
Light and Water 2,497,967 2,626,603
Drugs and Medicine Expense 2,476,465 7,510,020
Salaries and Wages-Casual/Contractual 1,795,738 26,250
Repairs and Maintenance 1,364,643 846,456
Overtime Pay 1,094,281 948,083
PERA/Adcom 1,030,500 507,000
Per Diem / RATA 902,000 767,000
Subsistence Allowance 894,477 675,856
VFP-Regional Assistance 840,000 900,000
Legal Fees / Litigation 806,863 626,730
Communication and Postage 786,606 602,514
SSS/PHIC/HDMF Contribution 613,866 476,830
Clothing Allowance 489,716 452,595
Retirement Pay / Separation Pay 420,680 0
Leave Commutation 255,436 147,513
Withholding Tax Expense 245,552 69,833
Training Expenses 164,856 0
Advertising and Publicity 138,221 9,458
Membership Dues-International 115,042 32,107
Subscription Expense 101,691 28,992
Bank Charges 45,694 0
Professional Fees 5,800 52,193
Consultation and Meetings 0 3,085,789
Leave Adjustments 0 2,191,745
Penalties and Other Charges 0 (106)
VFP-SDAI Financial Assistance 0 1,294,940
VFP-Calamity Financial Assistance 0 4,048,000
Other Expenses 8,000 230,675
Total General and Administrative Expenses 62,656,053 65,150,960

6. Other Expenses

PARTICULAR 2015 2014

Depreciation 1,098,446 1,013,202
Total Other Expenses 1,098,446 1,013,202

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 7. Cash and Other Cash Equivalents

PARTICULAR 2015 2014

Cash in Bank - PVB (211-3) 368,731,352 235,691,607
Cash in Bank - PVB (076-5) 0 6,011
Cash in Bank - PVB (090-1) 0 140,400
Cash in Bank - PNB (035-3) 0 1,407,368
Cash in Bank - PVB (887-3) 1,740,998 0
Cash in Bank - LBP (307-7) 0 33,826
Cash in Bank - BPI (268-3) 0 65,786
Cash in Bank - PVB (222-8) 19,721,149 23,283,313
Cash in Bank - PVB (870-7) 2,833,471 2,524,903
Cash in Bank - PVB (711-3) 93,923 93,853
Cash in Bank - PVB (388-6) 7,895,738 5,984,538
Total Cash and Other Cash Equivalents 401,016,631 269,231,605

8. Advances to Officers and Employees

PARTICULAR 2015 2014

Advances - Officers & Employees 2,157,641 1,788,368
Advances - OE MJCalub (1,554) (1,554)
Advances - OE MCDelaCruz 1,000 1,000
Advances - OE MTPasag 21,499 44,500
Due from SSS 48,620 5,100
Total Avances to Officers and Employees 2,227,206 1,837,414

9. Supplies and Materials

PARTICULAR 2015 2014

Office Supplies 393,568 575,895
Medicine Supplies 1,650,219 421,486
Total Supplies and Materials 2,043,787 997,381

10. Short Term Investment

PARTICULAR 2015 2014

PEFTOK 28,220 28,220
AFPSLAI 538,087 538,087
Total Short Term Investment 566,307 566,307

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11. Long Term Investment

PARTICULAR 2015 2014

Retirement Fund 1 (PVB 0036204135110) 0 9,482,066
Retirement Fund 2 (PVB 1005-00012-1) 0 1,144,484
Retirement Fund 3 10,352,609 114,412
Total Long Term Investment 10,352,609 10,740,962

12. Property, Plant and Equipment

PARTICULAR 2015 2014

Land 10,157,231,670 10,157,231,670
Building - Veterans Canteen 904,856 904,856
Condominium Units 11,901,432 11,901,432
Office Equipment 2,924,886 2,549,942
Furniture and Fixtures 162,581 61,244
Transportation Equipment 2,756,739 2,756,739
Carport 104,231 104,231
Improvements 468,699 468,699
Total Property Plant and Equipment 10,176,455,094 10,175,978,813
Less: Accumulated Depreciation (8,594,185) (7,495,739)
PPE - Net Book Value 10,167,860,909 10,168,483,074

13. Other Assets

PARTICULAR 2015 2014

PLDT 9,700 9,700
PILTEL (Taguig) 1,500 1,500
MERALCO 5,760 5,760
Injunction Bond 825,000 825,000
Commemorative Stamps 284,475 284,475
Other Assets 695,649 695,649
Total Other Assets 1,822,084 1,822,084

14. Accounts and Other Payables

PARTICULAR 2015 2014

Outstanding Accounts Payable 431,733 431,733
Membership Dues - July 2009 1,279,529 3,264,612
Membership Dues - January 2010 1,238,525 1,542,025
Membership Dues - July 2010 1,137,863 1,222,988
Membership Dues - January 2011 1,138,775 1,562,025

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 PARTICULAR 2015 2014
Membership Dues - July 2011 1,522,600 1,756,100
Membership Dues - January 2012 1,157,558 1,564,808
Membership Dues - July 2012 1,326,238 1,411,738
Membership Dues - January 2013 1,330,793 2,567,405
Membership Dues - July 2013 453,540 665,228
Membership Dues - January 2014 (211,963) (104,900)
Membership Dues - July 2014 (495,000) (638,530)
Membership Dues - January 2015 90,993 0
Membership Dues - July 2015 2,241,017 0
Medicine Payable - Medcare Asia (86,799) (86,799)
Total Accounts and Other Payable 12,555,402 15,158,433

15. Other Current Liabilities

PARTICULAR 2015 2014

Withholding Tax and VAT Payable 4,524,287 4,250,100
SSS/PHIC/HDMF Premium Payable 52,631 49,694
HDMF/SSS Salary Loan Payable 25,380 40,876
Rental/Advance Deposit 13,110,424 11,373,488
Total Other Current Liabilities 17,712,722 15,714,158

16. Net Equity

PARTICULAR 2015 2014

Equity Beginning 10,436,191,862 320,603,067
Asset Recognition (Derecognition) (212,195) 10,000,000,000
Prior Period Adjustments 0 (34,072)
Total Beginning Balance of Equity 10,435,979,667 10,320,568,995
Net Income 135,889,978 115,622,867
Equity Ending Balance 10,571,869,645 10,436,191,862

Asset Derecognition pertains to Cash in Bank which were derecognized in the books of
Veterans Federation of the Philippines due to closure of the following accounts:

PVB (Taguig) Account No. 0100-50000-901 140,400

BPI (Taguig) Account No. 8231-0039-76 65,785
PVB (Taguig) Account No. 03601-000076-5 6,010
TOTAL 212,195

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VETERANS FEDERATION OF THE PHILIPPINES
BALANCE SHEET
As of December 31, 2015
(With Corresponding Figures for 2014)
(In Philippine Peso)

Note 2015 2014

ASSETS

Current Assets

Cash 7 401,016,631 269,231,605

Accounts Receivable 15,829,060 12,966,450
Advances to Officers and Employees 8 2,227,206 1,837,414
Supplies and Materials 9 2,043,787 997,381
Short Term Investments 10 566,307 566,307
Prepayments 419,176 419,176

Total Current Assets 422,102,167 286,018,333

Non-Current Assets

Long Term Investment 11 10,352,609 10,740,962

Property Plant and Equipment 12 10,167,860,909 10,168,483,074
Other Assets 13 1,822,084 1,822,084

Total Non-Current Assets 10,180,035,602 10,181,046,120

TOTAL ASSETS 10,602,137,769 10,467,064,453

LIABILITIES AND NET EQUITY

Current Liabilities

Accounts and Other Payables 14 12,555,402 15,158,433

Other Current Liabilities 15 17,712,722 15,714,158

Total Current Liabilities 30,268,124 30,872,591

Total Liabilities 30,268,124 30,872,591

NET EQUITY 16 10,571,869,645 10,436,191,862

TOTAL LIABILITIES AND NET EQUITY 10,602,137,769 10,467,064,453

(The Notes on page 8 to 16 form part of these Financial Statements)

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VETERANS FEDERATION OF THE PHILIPPINES
STATEMENT OF CHANGES IN EQUITY
For the Year Ended December 31, 2015
(With Corresponding Figures for 2014)
(In Philippine Peso)

2015 2014

GOVERNMENT EQUITY
Donated Capital 10,157,231,670 10,157,231,670

10,157,231,670 10,157,231,670

RETAINED EARNINGS
Balance at Beginning of Year 278,960,192 163,371,397
Prior Period Adjustment 0 (34,072)
Asset Recognition (Derecognition) (212,195) 0
Net Income 135,889,978 115,622,867

Balance at the End of the Year 414,637,975 278,960,192

NET EQUITY 10,571,869,645 10,436,191,862

(The Notes on page 8 to 16 form part of these Financial Statements)

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VETERANS FEDERATION OF THE PHILIPPINES
STATEMENT OF CASH FLOW
For the Year Ended December 31, 2015
(With Corresponding Figures for 2014)
(In Philippine Peso)

2015 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Inflows
Receipt from Rental Income of Leases 217,356,822 198,074,734
Collection of Claims and Other Receivables 17,230,291 25,973,525
Collection from Other Income 5,445,049 3,403,640
240,032,162 227,451,899
Cash Outflows
Payment of Maintenance and Operating Expenses 18,352,645 19,039,173
Payment of Personal Services 26,426,190 23,332,829
Payment of Trade and Non-Trade Payables 21,896,163 18,563,988
Payment of Policy Making and Direction 6,315,572 3,292,330
Payment of Special Program and Support Services 11,316,094 19,486,626
Payment of Taxes, Licenses and Fees 23,880,400 19,261,138
108,187,064 102,976,084
NET CASH PROVIDED BY OPERATING ACTIVITIES 131,845,098 124,475,815

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of Property and Equipment (537,524) (1,259,194)
NET CASH USED IN INVESTING ACTIVITIES (537,524) (1,259,194)

CASH FLOWS FROM FINANCING ACTIVITIES

Collection from Interest Income 477,452 488,940
NET CASH PROVIDED INVESTING BY ACTIVITIES 477,452 488,940

NET INCREASE IN CASH AND CASH EQUIVALENTS 131,785,026 123,705,561

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR 269,231,605 145,526,044
CASH AND CASH EQUIVALENTS, END OF THE YEAR 401,016,631 269,231,605

(The Notes on page 8 to 16 form part of these Financial Statements)