MARY JOY L.

AMIGOS RICE STORE

NOTES TO THE FINANCIAL STATEMENTS

1. Reporting Entity

MARY JOY L. AMIGOS is an owner and a proprietor engaged in the business of trading
rice. It was born out of passion to help the people who are marginal and deprived but
have their different talent, skills and expertise.

The registered office of the Company is also its principal place of business at Brgy.
Tigum, Pavia, Iloilo.

2. Basis of Preparation

Statement of Compliance
The financial statements have been prepared in accordance with Philippine Financial
Reporting Standards for Small and Medium-sized Entities (PFRS for SMEs).

Basis of Measurement
The financial statements have been prepared on the historical cost basis.

Functional and Presentation Currency

These financial statements are presented in Philippine peso, which is also the Companys
functional currency. All financial information presented in Philippine peso has been
rounded off to the nearest peso, except when otherwise indicated.

Use of Estimates and Judgments

The preparation of financial statements in conformity with PFRS for SMEs requires
management to make judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts in the financial statements and accompanying
notes. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognized in the period in which the estimates are revised and
in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical

judgments in applying accounting policies that have the most significant effect on the
amount recognized in the financial statements are discussed as follows:

Estimated Useful Lives of Property and Equipment

The Company estimates useful lives of property and equipment based on the period over
which the assets are expected to be available for use. The estimated useful lives of
property and equipment are updated if expectations differ from previous estimates due to
physical wear and tear and technical or commercial obsolescence.

Property and equipment, net of accumulated depreciation and amortization as December

31, 2016 amounted to P 152,200.
(see Note 5).
3. Summary of Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods
presented in these financial statements unless otherwise indicated.

Cash
Cash includes cash on hand and in banks, which are stated at face value.

Property and Equipment

Items of property and equipment are initially measured at cost. After initial recognition,
all items of property and equipment are measured at cost less accumulated depreciation
and impairment losses, if any. Cost includes expenditure that is directly attributable to the
acquisition of the asset. The cost of replacing a part of an item of property and equipment
is recognized in the carrying amount of the item if it is probable that the future economic
benefits embodied within the part will flow to the Company, and its cost can be measured
reliably. The carrying amount of the replaced part is derecognized. The costs of the day-
to-day servicing of property and equipment are recognized in the statements of
comprehensive income as incurred.

Depreciation is calculated over the depreciable amount, which is the cost of an asset less
its residual value. Depreciation and amortization is recognized in statements of
comprehensive income on a straight-line basis over the estimated useful lives of each part
of an item of property and equipment, since this most closely reflects the expected
pattern of consumption of the future economic benefits embodied in the asset. Leased
assets are depreciated over the shorter of the lease term and useful lives unless it is
reasonably certain the company ownership by the end of the lease term.

The estimated useful lives of property and equipment are as follows:

Number of Years
Store Improvement 25
Tricycle 10

If there is an indication that there has been a significant change in the depreciation
method, useful life or residual value of the asset, the depreciation of that asset is
reviewed and adjusted prospectively, if appropriate.

Gains and losses on disposal of an item of property, plant and equipment are determined
by comparing the proceeds from disposal with the carrying amount of property, plant and
equipment, and are recognized on a net basis in the statements of comprehensive income.

Provisions and Contingencies

A provision is recognized if, as a result of a past event, the Company has a present legal
or constructive obligation that can be estimated reliably, and it is probable that a transfer
of economic benefits will be required to settle the obligation. Provisions are determined
by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognized as a finance cost. The Company does not
recognize a provision for future operating losses.

Contingent liabilities are not recognized as liabilities, except for provisions for
contingent liabilities of an acquiree in a business combination, but are disclosed in the
financial statements unless the possibility of an outflow of resources is remote.

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Contingent assets are not recognized but are disclosed in the financial statements when
an inflow of economic benefits is probable.

Owners Net Worth

Equity instruments are measured at the fair value of the cash or other resources received
or receivable, net of the direct costs of issuing the equity instruments. If payment is
deferred and the time value of money is material, the initial measurement is on a present
value basis.

Revenue Recognition
Revenue from the sale of goods in the course of ordinary activities is measured at the fair
value of consideration received or receivable, net of any trade discounts, prompt
settlement discounts and volume rebates. Revenue is recognized when persuasive
evidence exists, usually in the form of an executed sales agreement, that the significant
risks and rewards of ownership have been transferred to the buyer, recovery of the
consideration is probable, the associated costs and possible return of goods can be
estimated reliably, there is no continuing management involvement with the goods, and
the amount of revenue can be measured reliably.

Interest income on bank deposits is recognized when earned and presented net of related
final tax and interest expense.

Expense Recognition
Expenses are recognized when decrease in future economic benefits related to a decrease
in an asset or an increase of a liability has arisen that can be measured reliably.
Operating expenses are recognized when they are incurred.

Related Parties
Parties are considered related if one party has the ability, directly or indirectly, to control
the other party or exercise significant influence over the other party in making financial
and operating decisions. Parties are also considered to be related if they are subject to
common control or common significant influence. Related parties may be individuals or
corporate entities. Transactions between related parties are based on terms similar to
those offered to non-related parties.

Income Tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are
recognized in statements of comprehensive income except that a change attributable to an
item of income or expense recognized as other comprehensive income is also recognized
in other comprehensive income.

The Company measures a current tax liability (asset) at the amounts it expects to pay
(recover) using the tax rates and laws that have been enacted or substantively enacted by
the reporting date.

Deferred tax is recognized in respect of temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes and the carry forward benefits of unused net operating loss carryover
(NOLCO) and excess minimum corporate income tax (MCIT) over regular income tax.

Deferred tax is measured using the tax rates and laws that have been enacted or
substantively enacted by the reporting date.

A valuation allowance against deferred tax assets is recognized so that the net carrying
amount equals the highest amount that is more likely than not to be recovered based on

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 current or future taxable profit. The net carrying amount of a deferred tax asset is
reviewed at each reporting date and such valuation allowance is adjusted to reflect the
current assessment of future taxable profits.

Deferred tax assets and deferred tax liabilities are offset if the Company has a legally
enforceable right to offset the amounts and it intends either to settle on a net basis or to
realize the asset and settle the liability simultaneously.

Events After Reporting Date

Post year-end events that provide additional information about the Companys financial
position at reporting date (adjusting events) are recognized in the financial statements.
Post year-end events that are not adjusting events are disclosed in the notes to the
financial statements when material.

4. Cash

Cash in banks generally earn interest at prevailing bank deposit rates. Cash on hand and
in banks amounted to P 254,345 for the year ended December 31,2016.

5. Sales

This account consists of :

2016
FTM of March P 785,714
FTM of June 694,737
FTM of September 333,426
FTM of November 372,123
P 2,186,000

6. Cost of Sales

This account consists of:

2016
Beginning Inventory 0
Purchases 1,905,995
Total P 1,905,995

7. Salaries and Allowances

This account consist of actual wages of the owners helper and other activities paid for by
the Company for the benefit or welfare of its regular based employees.

Salaries and benefits for the year amounted to P 48,000.

_________________________________________________________________________

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8. Fuel & Oil

This account consist of gas used for the equipment and machines, as well as for the
tricycle.

Fuel & Oil for the year, amounted to P 20,380.

________________________________________________________________________
9. Hauling Expenses

These are fixed costs that your company incurs whether your trucks are hauling a load or
are in the parking lot.

Hauling Expenses for the year, amounted P 10,250.

_________________________________________________________________________
10. Miscellaneous Expenses

Miscellaneous Expenses report the amounts from many general ledger accounts whose
balances are not significant.

Miscellaneous Expenses for the year, amounted to P 2,295.

_________________________________________________________________________
11. Communication, Lights & Water

The cost of usage of utilities such as lighting, water, and heat.

Utility Expenses for the year, amounted to P 8,105.