XXXXXXXXXXXXXXX, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2018

1.) CORPORATE INFORMATION

The XXXXXXXXXX, INC.is a domestic corporation and was organized on October 10, 2011
under the Philippine Laws with SEC Registration No. CS2011XXXXX. Its primary purpose is to
engage in the business of beach resort development with resort facilities, hotels, camping
sites and other provision of short stays. The principal place of office is located at
SxxXXXXXXXX, Sarangani Province.

The financial statements of the company for the year ended December 31, 2018(including
the comparatives for the year ended December 31, 2017) were authorized for issue by the
Board of Directors on March 22, 2018.

2.) SIGNIFICANT ACOUNTING POLICIES

The following significant accounting policies have been consistently used by the company in
the preparation of its financial statements:

2..1 Basis of Financial Statement Preparation

a) Statement of Compliance with Philippine Financial Reporting Standards

The financial statements of the company l are prepared and presented in accordance
with the Philippine Financial Reporting Standards (PFRS) for Small and Medium-sized
entities issued by Philippine Financial Reporting Standards Council.

These financial statements have been prepared on historical cost basis.

b) Presentation of Financial Statements

The financial statements are prepared in accordance with PAS 1 (Presentation of

Financial Statements). The company presents all items of income and expenses in a
single statement of comprehensive income. Two comparative periods are presented for
the statement of financial position when the corporation applies an accounting policy
retrospectively; makes a retrospective restatement of items in the financial statements;
or reclassifies items in the financial statements

c) Functional and Presentation Currency

The financial statements are presented in Philippine Peso, which is the company’s
functional currency.

2.2 Cash & Cash Equivalents

Cash and cash equivalents include cash on hand and cash in bank. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known amounts of cash
with original maturities of three months or less and are subject to insignificant risk of
changes in value.

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XXXXXXXXXXXXXXX, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

2.3 Receivables

Receivables are stated at their nominal value as reduced by appropriate allowance for
doubtful accounts. The allowance for doubtful accounts is the estimated account of
probable losses arising from the non-collection based on past collection experience and
review of the current status of the long outstanding receivables. Receivables are included in
the current assets if maturity is within 12 months from the balance sheet date. If maturity is
beyond 12 months, these are classified as non-current assets.

2.4 Inventories

Inventories are stated at the lower of cost and estimated selling price less costs to complete
and sell. Cost of inventories includes all cost of purchase, cost of conversion and other costs
incurred to bring the inventories to their present location. Cost is calculated using the first-
in, first-out method.

At each reporting date, inventories are assessed for impairment, i.e., the carrying amount is
not fully recoverable due to damage, obsolescence or declining selling prices

2.5 Property and Equipment

All property & equipment are stated at cost less accumulated depreciation and any
impairment value. The initial cost of an item of property & equipment comprises its
purchase price, including import duties and nonrefundable purchase taxes, after deducting
trade discounts and rebates and costs directly attributable to bringing the asset ready for
use. Costs of major repairs, improvements and additions are capitalized, while the common
and minor repairs and maintenance are charged to expense when incurred.

Depreciation is computed using the straight line method. The valuation of property and
equipment, including estimates and the method used in depreciation are in conformity with
PAS 16.

The estimated useful lives of the property and equipment are as follows:
Cottages 5 years

If there is an indication that there has been a significant change in depreciation rate, useful
life or residual value of an asset, the depreciation of that asset is revised prospectively to
reflect the new expectations.

When the assets are retired from use or otherwise disposed of, their cost, accumulated
depreciation and amortization and any allowance for impairment loss are eliminated from
the accounts and any gain or loss resulting from their disposal is included in the statement of
income.

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XXXXXXXXXXXXXXX, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

2.6 Financial Liabilities

Financial liabilities include trade and other payables, interest-bearing loans and borrowings,
due to related parties and other non-current liabilities. These are measured at amortized
cost using the effective interest rate method. All interest charges are recognized as an
expense in the statement of comprehensive income.

Financial liabilities are derecognized from the statement of financial position when the
obligations are extinguished either through discharge, cancellation or expiration.

2.7 Revenue and Expense Recognition

Revenue is recognized to the extent that it is probable that economic benefits will flow to
the company and revenue can be reasonably measured. Revenue is measured at the fair
value of the consideration received, excluding discounts, rebates and other sales taxes. The
following specific recognition criteria must be met before the revenue is recognized:
a) Rental Income from the property that is leased to a third party under an
operating lease is recognized in the profit or loss on a straight line basis over the
lease term.
b) Interest – Revenue is recognized as interest accrues taking into account the
effective yield of interest.

Expenses are decreases in economic benefits during the accounting period in the form of
outflows or decreases in assets and increases in liabilities that result in decreases in equity,
other than distributions to equity participants. Operating expenses are generally
recognized when the services are used or the expense incurred while interest expense, if
applicable, is accrued as incurred in the appropriate period.

2.8 Related Parties

A related party transaction is a transfer of resources, services or obligations between a

reporting entity and a related party, regardless of whether a price is charged.

2.9 Employees Benefits

Employee benefits are all forms of considerations given by an entity in exchange for services
rendered by employees including board of trustees and management. The corporation
provides its employees with short term employee benefits such as salaries and wages, COLA,
SSS, PHIC and Pag-Ibig contributions. Employee benefits are recognized when an employee
has rendered service to the company during the accounting period.

2.10 Subsequent Events

Post year-end events that provide additional information about the corporation’s position at
the balance sheet date (adjusting events) are reflected in the financial statements. Post
year-end events that are not adjusting events are disclosed in the notes to the financial
statements when material.

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XXXXXXXXXXXXXXX, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

3.) SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The corporation’s preparation of its financial statements in accordance with PFRS for SMEs
requires the management to make judgments, estimates and assumptions that affect the
amounts reported in the financial statements and the related notes.

The estimates and assumptions used in the financial statements are based upon
management’s evaluation of the relevant facts and circumstances as of the date of the
corporation’s financial statements. The actual results could differ from such estimates.

 Estimated Useful Lives of Property & Equipment

The company estimates the useful lives of the property & equipment based on the
economic lives of the property & equipment. The estimated lives of the property
and equipment are reviewed periodically and updated if expectations differ
materially from previous estimates due to physical wear and tear, technical and
commercial obsolescence and other legal or other limits on the use of property &
equipment. However, it is possible that future results of operation could be
materially affected by changes in the estimates brought about by changes in factors
mentioned.

4.) CASH AND CASH EQUIVALENTS

This consists of the following:

5.) TRADE & OTHER RECEIVABLES

There are no accounts receivables in 2017 and 2016.

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XXXXXXXXXXXXXXX, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

6.) PROPERTY & EQUIPMENT

The movement within each class of property and equipment for the year ended December 31,
2018 follows:

The movement within each class of property and equipment for the year ended December 31,
2016 follows:

Particulars December 31, 2015 Additions/Transfers Disposals/Transfers December 31, 2016

COST
Lot 8,000,000 8,000,000
Cottages 32,000 32,000
- -
8,032,000 8,032,000

ACCUMULATED DEPRECIATION
Lot -
Cottages 12,800 6,400 19,200

12,800 6,400 19,200

NET CARRYING AMOUNT 8,019,200 (6,400) 8,012,800

Depreciation expense for the years ended December 31, 2018 and 2017 was P6,400.

7.) TRADE AND OTHER PAYABLES

This consists of the following:

8.) LOANS PAYABLE

This represents the long –term loan obtained from a private individual.

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XXXXXXXXXXXXXXX, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

9.) RETAINED EARNINGS

This consists of the following:

10.) GENERAL & ADMINISTRATIVE EXPENSES

This is composed of the following:

11.)REQUIRED UNDER REVENUE REGULATION 15-2010

In compliance with the requirements set by RA 15-2010, the following are the information on
taxes and licenses paid or accrued during the taxable year:

The taxpayer is vat-registered with vat output tax declaration of P 34,490 computed based on
the total gross income of P 287,413 for 2017.

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XXXXXXXXXXXXXXX, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2018

12.) EMPLOYEES BENEFITS

The institution provides only short term employee benefits to all its employees such as salaries
and wages, cola, SSS, PHIC and Pag-Ibig contributions. Employee benefits are recognized when
an employee has rendered service to the corporation during the accounting period.