FA Exercise 4.2-B

Financial assistance released to the National Agency X amounting to P2,250,000.00 was erroneously recorded under account Financial Assistance instead of account Due from NGAs

• Criteria

• Condition

• Cause

• Effect

The depreciation for PPE acquired as of December 31, 2014 was understated by ₱980,000.00

• Criteria

• Condition

• Cause

• Effect

Erroneous computation of the depreciation expense

• Criteria

• Condition

• Cause

• Effect

Incorrect application of the allowed alternative treatment for Loans Payable

• Criteria

• Condition

• Cause

• Effect

Understatement of the Interest Expense account by ₱4,251,455.07 and overstatement of the Loans Payable account and Accumulated Surplus/Deficit account by ₱13,335,059.89 and ₱3,549,532.59, respectively

• Criteria

• Condition

• Cause

• Effect

The Land and Office Building accounts were understated by undetermined amount

• Criteria

• Condition

• Cause

• Effect

The Loans Payable account balance of ₱18,014,504.00 was classified in the Statement of Financial Position for as of December 31, 2017 as current liability

• Criteria

• Condition

• Cause

• Effect

Paragraph 70 of PPSAS 1 states that “An entity shall present current and non-current assets, and current and non-current liabilities, as separate classifications on the face of its statement of financial position … except when a presentation based on liquidity provides information that is reliable and is more relevant...”

• Criteria

• Condition

• Cause

• Effect

Presenting the total amount of ₱18,014,504.00 as current liability gives the impression to readers of the financial statements that the whole amount is due to be settled within 12 months after the reporting date or within the ensuing year.

• Criteria

• Condition

• Cause

• Effect

the loan amortization of ₱7,518,420.00 and loans balance of ₱10,496,084.00 were presented under the same classification

• Criteria

• Condition

• Cause

• Effect