Q & a - Review of Chart of Accounts - Philippines

3652 Words Aug 16th, 2009 15 Pages

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
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2. Philippine client wants to separate the employee advance and company owe to employee for travel expense to two accounts. Can it be booked in one account using debit/credit to separate the transaction? Answer: The answer will depend on the Company’s accounting policy. But it is suggested that this be booked separately into two accounts, Employee Travel Advances (liability) and Receivable from Employees (assets). The purpose of separate classification of these accounts is for control purposes and facilitates compliance with PFRS much easier. For example: Employee Travel Advances are by their nature, classified as a prepayment. These are amounts advanced to an employee for transportation subject to future liquidation. These travel advances payable to employees may be given to regular personnel as well as to key management personnel (officers). If these travel advances is separately accounted for between those given to regular personnel and key management personnel (officers), in this way there would be monitoring and proper liquidation of travel advances. Please note that key management personnel are considered as related party. The Philippines adopts Philippine Accounting Standards (PAS) 24 – Related Party Disclosures. PAS 24 requires necessary disclosures of related party transactions and outstanding balances with such parties. On the other hand, separating Receivable from Employees is recommended because PFRS
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