REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City

CIRCULAR
No.
Date

TO All Local Chief Executives; Accountants/Heads of Accounting

Division/Unit; Local Treasurers; Budget Officers; Heads of Supply
and/or Property Division/Unit; Commission on Audit (COA) Assistant
Commissioners, Directors, Auditors; and All Others Concerned

SUBJECT Supplemental Guidelines on the Implementation by Local Government

Units (LGUs) of COA Circular No. 2022-004 dated May 31, 2022,
Prescribing the Guidelines on the Implementation of Section 23 of the
General Provisions of Republic Act (RA) No. 11639 also known as the
General Appropriations Act (GAA) for Fiscal Year (FY) 2022 relative to
the increase in the capitalization threshold from Pl 5,000.00 to
P50,000.00

1.0 RATIONALE

COA Circular No. 2022-004 directs the national government agencies, LGUs and
government corporations to adopt and implement the policy on the increase of capitalization
threshold of property, plant and equipment (PPE) from P15,000.00 to P50,000.00.

However, the policy on the P15,000.00 capitalization threshold and the appropriate
accounts to be used for the implementation of the said policy were not included in various
COA issuances prescribing the accounting rules and regulations for LGUs, such as COA
Circular No. 2002-003' dated June 20, 2002, COA Circular No. 2005-0022 dated April 14,
2005, and COA Circular No. 2015-009° dated December 1, 2015. Thus, there is a need to
provide supplementary guidelines which prescribe the implementation of the current policy
on capitalization threshold, the recognition of the semi-expendable property, and the
appropriate accounts and forms to be used by the LGUs.

2.0 COVERAGE

This Circular shall be implemented by all LGUs.

1 Prescribing the Manual on the New Government Accounting System (Manual ersion) Fo
Government Units.
2 Accounting Policy on Items with Serviceable Life of More Than One Year but Sm II Enough to b considered

as Property, Plant and Equipment.

3
Prescribing the Revised Chart ofAccouna/or Local Government Units.

t Page I of4

- (909--
 3.0 IMPLEMENTING GUIDELINES

3.1 Tangible items with a cost of Fifty Thousand Pesos (P50,000.00) and above and
have met the following criteria shall be recognized as PPE:

3 .1.1 It is probable that the future economic benefits or service potential

associated with the item will flow to the entity;

3.1.2 The cost or fair value of the item can be measured reliably;

3 .1.3 Beneficial ownership and control clearly rest with the government; and

3.1.4 The asset is used to achieve government objectives.

3.2 In lieu of Acknowledgment Receipt for Equipment (ARE), Property

Acknowledgment Receipt (PAR) (Annex A. I) shall be used to record the issuance
of PPE to the end-user for all PPE acquisitions for calendar year (CY) 2024
onwards.

3.3 Tangible items which meet the definition and recognition criteria of PPE but with
cost below Fifty Thousand Pesos (P50,000.00) shall be accounted in the books of
accounts of the LGUs as inventory under the appropriate semi-expendable
property account upon purchase and shall be recognized as expense upon issuance
to the end-user.

3.4 Inventory Custodian Slip (ICS) shall be issued to the end-user of semi-
expendable property to establish accountability over such item.

3.5 The setting of capitalization threshold of P50,000.00 shall be considered as a

change in accounting policy and shall be applied retrospectively. It means that the
adoption of capitalization threshold of P50,000.00 shall be applied for all tangible
items acquired in CY 2024 onwards and in the prior years.

3.6 For tangible items below P50,000.00 acquired prior to CY 2024 and previously
classified as PPE, which are still in custody of the Supply and/or Property
Division/Unit:

3.6.1 The cost of these items shall be reclassified to the appropriate semi-
expendable property account under the major account group Inventories
and the corresponding accumulated depreciation and accumulated
impairment losses shall be closed in the books of accounts;

4 COA Circular No. 2002-003 dated J~O, 2002, Volume II, Annex 34.
5 COA Circular No. 2022-004 dated M 1, 2022, Annex A.3.

Page 2 of 4
 3.6.2 The Property Cards (PCs) being maintained by the Supply and/or
Property Division/Unit for these items shall be replaced by Semi-
Expendable Property Cards (SPCs) (Annex A.2); and

3.6.3 Likewise, the PPE Ledger Cards' being maintained by the Accounting
Division/Unit for these items shall be replaced by Semi-Expendable
Property Ledger Cards (SPLCs) (Annex A.3).

3.7 For tangible items below P50,000.00 acquired and issued prior to CY 2024 and
have been classified as PPE:

3. 7 .1 The carrying amount of the items shall be expensed/charged to Prior

Period Adjustment and the corresponding accumulated depreciation and
accumulated impairment losses shall be closed in the books of accounts;
and

3.7.2 The existing AREs for these items shall be replaced by ICS, except for
low-valued semi-expendable property with expired estimated useful life
wherein the existing ARE shall be automatically cancelled.

3.8 The following forms shall be used for items previously classified as inventories
but qualify as semi-expendable property in accordance with the account
description under Annex B New Accounts to be Used of this Circular, and are
still in custody of the Supply and/or Property Division/Unit:

3.8.1 For prior years' acquisitions:

a. The Stock Cards (SCs)" being maintained by the Supply and/or

Property Division/Unit for these items shall serve as SPCs until these
items are issued, provided that the estimated useful life of the items
is to be indicated in the SCs; and

b. The Supplies Ledger Cards (SLCs)"" being maintained by the

Accounting Division/Unit for these items shall serve as SPLCs until
these items are issued, provided that the estimated useful life of the
items is to be indicated in the SLCs.

3.8.2 For CY 2024 acquisitions:

a. The SPCs shall be used for these items by the Supply and/or Property
Division/Unit; and

6 COA Circular No. 2002-003 dated June 20, 2002, Annex 37.
7
Ibid, Annex 9.
" This pertains to semi-expendable property with cost of P5,000.00 or less per item.
No. 2022-004)
9
COA Circular No. 2002-003 dated June 20~ 2 02, Annex 36.
10
Ibid, Annex 7.

Page 3 of 4
 b. The SPLCs shall be used for these items by the Accounting
Division/Unit.

3.9 For loss of low-valued semi-expendable property before the expiration of its
estimated useful life, the existing policies and guidelines on loss of government
property shall apply.

3.10 All other policies set forth under COA Circular No. 2022-004 shall be applied by
the LGUs as applicable.

4.0 NEW ACCOUNTS TO BE USED

The new accounts provided in Annex B shall be used in the implementation of this
Circular.

5.0 ILLUSTRATIVE ACCOUNTING ENTRIES

The illustrative accounting entries for the implementation of the policy on semi-
expendable property are shown in Annex C.

6.0 SAVING CLAUSE

Any clarification or request for assistance on the implementation of this Circular or

cases not covered herein shall be referred to this Commission, through the Government
Accountancy Sector, for resolution.

7.0 REPEALING CLAUSE

All circulars, memoranda and other issuances or parts thereof which are inconsistent
with the provisions of this Circular are hereby rescinded, repealed or modified accordingly.

8.0 EFFECTIVITY

This Circular shall take effect after 15 days from publication in a newspaper of general
circulation.

111111111111 I
ROLAND CAFE PO
Commissioner

Page 4 of 4
 Annex A.I

PROPERTY ACKNOWLEDGMENT RECEIPT

LGU: _
Fund: _ PR No.

Property Date
Unit Description Amount
Quantity Number Acquired

Received by: Issued by:

Signature over Printed Name of End User Signature over Printed Name of Supply and/or
Property Custodian

Position/Office Position/Office

V
-
Date
Date r t
H I/
)

_J
 Annex A.I

PROPERTY ACKNOWLEDGMENT RECEIPT

(PAR)

INSTRUCTIONS

A. The PAR shall be used in the Supply and/or Property Division/Unit to record the issuance of
movable PPE to end-user. It shalJ be maintained by fund. It shall be renewed every three years
or every time there is a change in custodianship/user of the property.

B. This form shall be accomplished as follows:

l. LGU - name of the Province/City/Municipality

2. Fund the fund name in accordance with the law that created the fund and/or as assigned
by the Province/City/Municipality
3. PAR No. - number assigned by the Supply and/or Property Custodian for control purposes
which shall be as follows:

0000-00-0000

TT
L► .
ace
Serial number (one series per year)

9qF

4. Quantity- number of unit/s issued to the employee or user of the property

5. Unit unit of measurement such as piece, set, etc.
6. Description - brief description or details of the property including serial number, if any
7. Property Number number assigned by the Supply and/or Property Division/Unit to the
property issued
8. Date Acquired a cquisition date of the property
9. Amount acquisition cost of the property

C. The PAR shall be prepared in two copies distributed as follows:

Original - Supply and/or Property Division/Unit for file

Copy2 - Recipient or user of the property

D. The recipient or end user of the property shall acknowledge receipt of the property by signing
the "Received by" portion and indicate the date of receipt of the property. The designated
Supply and/or Property Custodian shall sign the "Issued by" portion and indicate the date of
issuance of the property.
 q

Annex A.2

SEMI-EXPENDABLE PROPERTY CARD

LGU: _ ggd;

Semi-expendable Property : Semi-expendable Property Number:

Description : Estimated Useful Life:

Date of Receipt Issue/Transfer/ Disposal Balance

Date Reference Amount Remarks
Expiration Item No. Qty. Unit Cost Total Cost Item No. Qty. Office/Officer Qty.

'
I

$
 AnnexA.2

SEMI-EXPENDABLE PROPERTY CARD

(SPC)

INSTRUCTIONS
A. The SPC shall be maintained in the Supply and/or Property Division/Unit for each class of semi-
expendable property. The Supply and/or Property Custodian shall record promptly the
description/information about the asset, acquisition (based on the Inspection and Acceptance Report and
other supporting documents), and its issuance/transfer/disposal. It shall be maintained by fund.

B. This form shall be accomplished as follows:

1. LGU- name ofthe Province/City/Municipality
2. Fund - the fund name in accordance with the law that created the fund and/or as assigned by the
Province/City/Municipality
3. Semi-expendable Property-type of semi-expendable property
4. Description description of the semi-expendable property (i.e., brand, size, color, serial no., etc.)
5. Semi-expendable Property No.- number assigned by the Supply and/or Property Division/Unit
to the semi-expendable property
6. Estimated Useful Life estimated useful life of the item received
7. Date date of acquisition/issue/transfer/disposal
8. Reference number assigned to the reference document used as basis in recording the receipt,
issue, transfer or disposal of semi-expendable property
9. Date of Expiration date of expiration of the semi-expendable property consistent with its
estimated useful life.
10. Receipt-Item No. number assigned by the Supply and/or Property Division/Unit

rrll 'f..-
Example:
10 0

►
---• Series/Quantity of item
► Order of acquisition (order of acquisition shall be renewed every year)
b Year of acquisition (last two digit of the year)

11. Receipt-Qty./Unit Cost/Total Cost the quantity, unit cost and total cost ofthe semi-expendable
property received
12. Issue/Transfer/Disposal-Item No.- item number of semi-expendable property issued to end-us ,
transferred or disposed, etc.
Example:
24-01-01

- ► Number of item issued

► Order of acquisition (order of acquisition shall be renewed every year)
► Year of acquisition (last two digit ofthe year)
13. Issue/Transfer/Disposal-Qty.- quantity of semi-expendable property issued to end-user,
transferred or disposed, etc.
14. Issue/Transfer/Disposal-Office/Officer name of agency/entity and/or accountable person
receiving the transferred or issued semi-expendable property
15. Balance-Qty.- difference between the quantity of the semi-expendable property on hand less the
issued, transferred, or disposed item/s, if any
16. Amount- amount of semi-expendable property received based on source documents
17. Remarks important information, observation or comment about the semi-expendable property
being received, issued, transferred or disposed
C. Transactions shall be posted from the source documents.
D. The Report on the Physical Count of Semi-expendable Property (RPCSP) sh 11 be reconciled with the
SPCs every year and any discrepancies should be immediately verified and a usted ifnecessary.

$
 AnnexA.3

SEMI-EXPENDABLE PROPERTY LEDGER CARD

LGU: Fund: _
-----------------
Semi-expendable Property : Semi-expendable Property No. :
Description : Estimated Useful Life:
Receipt Repair History
Issues/Transfers/ Adjusted
Date Reference Unit Total
Qty. Adjustment/s Cost Nature of Repair Amount
Cost Cost

/
• /
/
V
I=
}
l
~
 AnnexA.3

SEMI-EXPENDABLE PROPERTY LEDGER CARD

(SPLC)

INSTRUCTIONS

A. The SPLC shall be kept in the Accounting Division/Unit for each class of semi-expendable
property. The Accounting Staff in charge in maintaining the SPLC shall record promptly the
acquisition, description, custody, impairment, issue/transfers/disposal, repair history, and other
information about the property. It shall be maintained by fund.

B. This ledger shall be accomplished as follows:

1. LGU - name of the Province/City/Municipality

2. Fund the fund name in accordance with the law that created the fund and/or as assigned
by the Province/City/Municipality
3. Semi-expendable Property - type of semi-expendable property
4. Description description of the semi-expendable property (i.e. brand, size, color, etc.)
5. Semi-expendable Property No. - number assigned by the Supply and/or Property
Division/Unit to the semi-expendable property
6. Estimated Useful Life- estimated useful life of semi-expendable property
7. Dat e date of the source/reference document
8. Reference - reference documents used as the bases in recording the transactions such as
Journal Entry Voucher (JEV)
9. Receipt-Qty./Unit Cost/Total Cost the quantity, unit cost and total cost of the semi-
expendable property received
10. Issues/Transfers/Adjustment/s - the cost of the semi-expendable property issued to end-
user, transferred to other government agency/ies, disposed, or the amount of adjustrnent/s
made through JEV
11. Adjusted Cost- the difference between the total cost of the asset less
issues/transfers/adjustments, if any
12. Repair History-Nature of Repair/Amount the nature ofrepair (specify nature of minor
or major repair, i.e., rewiring, engine overhaul, etc.) and the cost of repair

C. Transactions shall be posted from the source documents.

D. The SPLC shall be reconciled with the RPCSP, SPC and the control accounts. Any
discrepancies shall be immediately verified and adjusted.
 Annex B

NEW ACCOUNTS TO BE USED

I. List of New Accounts

ACCOUNT CODE ACCOUNT TITLE

1 Assets
04 Inventories
05 Semi-Expendable Machinery and Equipment
1 04 05 010 Semi-Expendable Machinery
1 04 05 020 Semi-Expendable Office Equipment
1 04 05 030 Semi-Expendable Information and Communications Technology
Equipment
1 04 05 040 Semi-Expendable Agricultural and Forestry Equipment
1 04 05 050 Semi-Expendable Marine and Fishery Equipment
1 04 05 060 Semi-Expendable Airport Equipment
1 04 05 070 Semi-Expendable Communications Equipment
1 04 05 080 Semi-Expendable Disaster Response and Rescue Equipment
1 04 05 090 Semi-Expendable Military, Police and Security Equipment
1 04 05 100 Semi-Expendable Medical, Dental and Laboratory Equipment
1 04 05 110 Semi-Expendable Printing Equipment
1 04 05 120 Semi-Expendable Sports Equipment
1 04 05 130 Semi-Expendable Technical and Scientific Equipment
1 04 05 140 Semi-Expendable Construction Equipment
1 04 05 990 Semi-Expendable Other Machinery and Equipment
06 Semi-Expendable Furniture, Fixtures and Books
1 04 06 010 Semi-Expendable Furniture and Fixtures
1 04 06 020 Semi-Expendable Books

5 Expenses
02 Maintenance and Other Operating Expenses
03 Supplies and Materials Expenses
5 02 03 210 Semi-Expendable Machinery and Equipment Expenses
5 02 03 220 Semi-Expendable Furniture, Fixtures and Books Expenses
13 Repairs and Maintenance
5 02 13 210 Repairs and Maintenance-Semi-Expendable Machinery and
Equipment
5 02 13 220 Repairs and Maintenance-Semi-Expendable Furniture, Fixtures and
Books

Pagel of 7
 Annex B

II. Description of New Accounts

1 ASSETS

1 Assets
04 Inventories
05 Semi-Expendable Machinery and Equipment

Account Title Semi-Expendable Machinery

Account Code 10405010
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
machinery costing less than the prescribed capitalization threshold for
PPE, for use in government operations. This account is credited upon
issuance to end-users, impairment, transfer, loss, or other disposal, among
others.

Account Title Semi-Expendable Office Equipment

Account Code 10405020
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
office equipment costing less than the prescribed capitalization threshold
for PPE, for use in government operations. This includes small tangible
items like calculators, typewriters, punchers, staplers, shredders, and
other similar items for use in government operations. This account is
credited upon issuance to end-users, impairment, transfer, loss, or other
disposal, among others.

Account Title Semi-Expendable Information and Communications Technology

Equipment
Account Code 10405030
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
information and communications technology equipment, which includes
laptops, printers, scanners, and the like, costing less than the prescribed
capitalization threshold for PPE, for use in government operations. This
account is credited upon issuance to end-users, impairment, transfer, loss,
or other disposal, among others.

Account Title Semi-Expendable Agricultural and Forestry Equipment

Account Code 10405040
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
agricultural and forestry equipment costing less than the prescribed
capitalization threshold for PPE, for use in government operations. It
includes threshing and milling machines, plow, grass cutting machines,
power saw, and other similar items for use in government operations. This
account is credited upon issuance to end-users, impairment, transfer, loss,
or other disposal, among others.
 Annex B

Account Title Semi-Expendable Marine and Fishery Equipment

Account Code 10405050
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
marine and fishery equipment costing less than the prescribed
capitalization threshold for PPE, for use in government operations. It
includes fishnets, fishing rods, fish traps, floats and other similar items
for use in government operations. This account is credited upon issuance
to end-users, impairment, transfer, loss, or other disposal, among others.

Account Title Semi-Expendable Airport Equipment

Account Code 10405060
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
airport equipment costing less than the prescribed capitalization threshold
for PPE, for use in government operations. It includes luggage carts,
chocks, and the like. This account is credited upon issuance to end-users,
impairment, transfer, loss, or other disposal, among others.

Account Title Semi-Expendable Communications Equipment

Account Code 10405070
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
communications equipment costing less than the prescribed capitalization
threshold for PPE, for use in government operations. This account is
credited upon issuance to end-users, impairment, transfer, loss, or other
disposal, among others.

Account Title Semi-Expendable Disaster Response and Rescue Equipment

Account Code 10405080
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
disaster response and rescue equipment costing less than the prescribed
capitalization threshold for PPE, for use in disaster response and rescue
activities. This account is credited upon issuance to end-users,
impairment, transfer, loss, or other disposal, among others.

Account Title Semi-Expendable Military, Police and Security Equipment

Account Code 10405090
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
military, police and security equipment costing less than the prescribed
capitalization threshold for PPE, for use in government operations. This
account is credited upon issuance to end-users, impairment, transfer, loss,
or other disposal, among others.
 Annex B

Account Title Semi-Expendable Medical, Dental and Laboratory Equipment

Account Code 10405100
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
medical, dental and laboratory equipment costing less than the prescribed
capitalization threshold for PPE, for use in the delivery of medical, dental
and laboratory services. This account is credited upon issuance to end-
users, impairment, transfer, loss, or other disposal, among others.

Account Title Semi-Expendable Printing Equipment

Account Code 10405110
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
printing equipment costing less than the prescribed capitalization
threshold for PPE, for use in government printing needs. This account is
credited upon issuance to end-users, impairment, transfer, loss, or other
disposal, among others.

Account Title Semi-Expendable Sports Equipment

Account Code 10405120
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
sports equipment costing less than the prescribed capitalization threshold
for PPE, for use in the government's promotion of sports, such as:
treadmills, stationary bikes, weights, gymnastic facilities, basketball
goals and the like. This account is credited upon issuance to end-users,
impairment, transfer, loss, or other disposal, among others.

Account Title Semi-Expendable Technical and Scientific Equipment

Account Code 10405130
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
technical and scientific equipment costing less than the prescribed
capitalization threshold for PPE, for use in government operations. Th"
account is credited upon issuance to end-users, impairment, transfer
or other disposal, among others.

Account Title Semi-Expendable Construction Equipment

Account Code 10405140
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
construction equipment costing less than the prescribed capitalization
threshold for PPE, for use in government operations, such as: shovel,
wheel barrow, electric drills, hammers and the like. This account is
credited upon issuance to end-users, impairment, tra er, loss, or other
disposal, among others.
 Annex B

Account Title Semi-Expendable Other Machinery and Equipment

Account Code l 0405990
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
equipment costing less than the prescribed capitalization threshold for
PPE, not otherwise classified under the specific semi-expendable
machinery and equipment accounts. This account is credited upon
issuance to end-users, impairment, transfer, loss, or other disposal, among
others.

06 Semi-Expendable Furniture, Fixtures and Books

Account Title Semi-Expendable Furniture and Fixtures

Account Code 10406010
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
furniture and fixtures costing less than the prescribed capitalization
threshold for PPE, for use in government operations. This account is
credited upon issuance to end-users, impairment, transfer, loss, or other
disposal, among others.

Account Title Semi-Expendable Books

Account Code 10406020
Normal Balance Debit
Description This account is debited to recognize the cost of the purchased/acquired
books and other reference materials costing less than the prescribed
capitalization threshold for PPE, for use in government operations. This
account is credited upon issuance to end-users, impairment, transfer, loss,
or other disposal, among others.

5 EXPENSES

5 Expenses
02 Maintenance and Other Operating Expenses
03 Supplies and Materials Expenses

Account Title Semi-Expendable Machinery and Equipment Expenses

Account Code 50203210
Normal Balance Debit
Description This account is debited to recognize the cost of semi-expenda e
machinery and equipment used in LGU operations. This account is
credited, at year end, to close to the Income and pense Summary
account, among others.

Subsidiary Ledgers:
01- Machinery
02- Office Equipment
03- Information and Communications Technology quipment
04 Agricultural and Forestry Equipment

Pager,f7
 Annex B

05 - Marine and Fishery Equipment

06- Airport Equipment
07- Communications Equipment
08- Disaster Response and Rescue Equipment
09- Military, Police and Security Equipment
10- Medical, Dental and Laboratory Equipment
11- Printing Equipment
12- Sports Equipment
13- Technical and Scientific Equipment
14- Construction Equipment
99- Other Machinery and Equipment

Account Title Semi-Expendable Furniture, Fixtures and Books Expenses

Account Code 50203220
Normal Balance Debit
Description This account is debited to recognize the cost of semi-expendable
furniture, fixtures and books used in LGU operations. This account is
credited, at year end, to close to the Income and Expense Summary
account, among others.

Subsidiary Ledgers:
01-- Furniture and Fixtures
02- Books

13 Repairs and Maintenance

Account Title Repairs and Maintenance-Semi-Expendable Machinery and Equipment

Account Code 50213210
Normal Balance Debit
Description This account is debited to recognize the cost of the day-to-day
servicing/repairs and maintenance of semi-expendable machinery and
equipment. This account is credited, at year end, to close to the Income
and Expense Summary account, among others.

Subsidiary Ledgers:
01- Machinery
02- Office Equipment
03- Information and Communications Technology Equipment
04- Agricultural and Forestry Equipment
05- Marine and Fishery Equipment
06- Airport Equipment
07 Communications Equipment
08 - Disaster Response and Rescue Equipment
09- Military, Police and Security Equipment
10-Medical, Dental and Laboratory Equipment
11 - Printing Equipment
12- Sports Equipment
13- Technical and Scientific Equipment
14- Construction Equipment
99- Other Machinery and Equipment

Pageyf7
 Annex B

Account Title Repairs and Maintenance-Semi-Expendable Furniture, Fixtures and

Books
Account Code 50213220
Normal Balance Debit
Description This account is debited to recognize the cost of the day-to-day
servicing/repairs and maintenance of semi-expendable furniture, fixtures
and books. This account is credited, at year end, to close to the Income
and Expense Summary account, among others.

Subsidiary Ledgers:
01- Furniture and Fixtures
02-Books

Page 7 of 7
 Annex C

Illustrative Accounting Entries for Local Government Units

Assumption:
Acquisition Cost of Machinery P49,000.00
Less : Accumulated Depreciation 9,800.00
Accumulated Impairment Losses 10,000.00
Net Carrying Amount/Value P29,200.00

CASE 1: Tangible items below P50,000.00 acquired prior to CY 2024 previously classified
as PPE which are available for use and still in custody of the Supply and/or
Property Division/Unit

a. Reclassification of machinery to semi-expendable property

Account Title Account Code Debit Credit

Semi-Expendable Machinery 10405010 P49,000.00
Machinery 10705010 P49,000.00
To recognize reclassification of machinery to semi-expendable property.

b. Closing of previously recognized accumulated depreciation

Account Title Account Code Debit Credit

Accumulated Depreciation-
Machinery 10705011 9,800.00
Prior Period Adjustment 30101020 P9,800.00
To close previously recognized accumulated depreciation.

c. Closing of previously recognized accumulated impairment losses

Account Title Account Code Debit Credit

Accumulated Impairment Losses-
Machinery 10705012 P10,000.00
Prior Period Adjustment 30101020 P10,000.00 l
To close previously recognized accumulated impairment losses. /
d. Compound Entry - summary of the foregoing accounting entries

Account Title Account Code Debit

K Cr edit
Semi-Expendable Machinery 10405010 P49,000.00
Accumulated Depreciation-
Machinery 10705011 9,800.00
Accumulated Impairment Losses-
Machinery 10705012 10,000.00
Machinery 10705010 t P49,000.00
Prior Period Adjustment 30101020 4 19,800.00
To recognize reclassification of machinery to semi-exper dable property due
to change in accounting policy on capitalization threshol 1 for PPE.

('
Pag >1of 4
 Annex C

CASE 2: Tangible items below P50,000.00 acquired and issued prior to CY 2024 and
previously classified as PPE

a. Derecognition of issued machinery

Account Title Account Code Debit Credit

Prior Period Adjustment 30101020 P49,000.00
Machinery 10705010 P49,000.00
To derecognize the issued semi-expendable machinery.

b. Closing of previously recognized accumulated depreciation

Account Title Account Code Debit Credit

Accumulated Depreciation-
Machinery 10705011 P9,800.00
Prior Period Adjustment 30101020 P9,800.00
To close previously recognized accumulated depreciation.

c. Closing of previously recognized accumulated impairment losses

Account Title Account Code Debit Credit

Accumulated Impairment Losses-
Machinery 10705012 P10,000.00
Prior Period Adjustment 30101020 P10,000.00
To close previously recognized accumulated impairment losses.

d. Compound Entry - summary of the foregoing accounting entries

Account Title Account Code Debit Credit

Prior Period Adjustment 30101020 P29,200.00
Accumulated Depreciation-
Machinerv 10705011 9,800.00
Accumulated Impairment Losses-
Machinery 10705012 10,000.00
Machinery 10705010 P49,000.00
To recognize adjustments due to change in accounting policy on capitalizatt/
·o •
threshold.

CASE 3: Ta ngible items below PS0,000.00 acquired prior to CY 2024 and issued
d;~
20 24
\,
a. Reclassification of machinery to semi-expendable property

Account Title Account Code Credit

Semi-Ex endable Machiner 10405010
10705010
To recosnize reclassification of machiner

$
Page 2 of 4
 Annex C

b. Closing of previously recognized accumulated depreciation

Account Title Account Code Debit Credit

Accumulated Depreciation-
Machinery 10705011 P9,800.00
Prior Period Adjustment 30101020 P9,800.00
To close previously recognized accumulated depreciation.

c. Closing of previously recognized accumulated impairment losses

Account Title Account Code Debit Credit

Accumulated Impairment Losses-
Machinery 10705012 P10,000.00
Prior Period Adjustment 30101020 P10,000.00
To close previously recognized accumulated impairment losses.

d. Issuance of Semi-Expendable Property

Account Title Account Code Debit Credit

Semi-Expendable Machinery and
Equipment Expenses
0 I - Machinery 50203210 P49,000.00
Semi-Expendable Machinery 10405010 P49,000.00
To recognize issuance of semi-expendable machinery.

e. Compound Entry summary of the foregoing accounting entries

Account Title Account Code Debit Credit

Semi-Expendable Machinery and
Equipment Expenses
0 I -- Machinerv 50203210 P49,000.00
Accumulated Depreciation-
Machinery 10705011 9,800.00
Accumulated Impairment Losses-
Machinery 10705012 10,000.00
Machinery 10705010 P49,000.00
Prior Period Adjustment 30101020 19,800.00
To recognize adjustments due to change in accounting policy on capitalization
threshold for PPE.

CASE 4: Tangible items below P50,000.00 acquired and issued in CY 2024

a. Recognition of acquired semi-expendable property

Account Title Account Code Cred t

Semi-Ex endable Machiner 10405010
Cash in Bank-Local Currency,
Current Account 10102010 P49,000.00
To reco endable machiner
 Annex C

b. Issuance of machinery to end-user

Account Title Account Code Debit Credit

Semi-Expendable Machinery and
Equipment Expenses
01 - Machinery 50203210 P49,000.00
Semi-Expendable Machinery 10405010 P49,000.00
To recognize the issuance of semi-expendable machinery.

$
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