DOANE CHRISTIAN INTERNATIONAL SCHOOL

FOUNDATION INC 2019

5TH AVENUE LEDESCO VILLAGE LAPAZ ILOILO CITY 5000

NOTES TO FINANCIAL STATEMENT

As of and for the fiscal years ended March 31, 2020 and 2019

1 CORPORATE GENERAL INFORMATION

DOANE CHRISTIAN INTERNATIONAL SCHOOL

FOUNDATION, INC. is a domestic, non-stock and non-profit corporation
having the primary purpose envisions by God’s grace to successfully equip
Christian young students with the wisdom, knowledge and skill based on
Biblical worldview to enable them to progress through college and life by
training and reaching them with an excellent, Biblically-based preschool,
elementary, secondary and senior high school curriculum so that they would
manifest truthful Christian character, conduct, leadership, service, stewardship
and worship.

The members/incorporators are of legal age and majority are residents of the
Philippines. The corporation was duly approved and registeredwith the
PhilippineSecurities and Exchange Commission (SEC) and governed by the
Laws of the Republic of the Philippines.

SECURITIES & EXCHANGE COMMISSION

Company Reg. No.: E200100012

Date of Registration: January 10, 2001

BUREAU OF INTERNAL REVENUE

TIN NO.: 005-822-614-000

The company’s principal registered address of business is at 5 th Avenue

Ledesco Village Lapaz Iloilo City 5000.

The financial statements of the said corporation for the fiscal year ended
March 31, 2020 (with comparative figures for FY 2019), were authorized for
issue by the Board of Directors on July 22, 2020.

2 BASIS OF PREPARATION

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FOUNDATION, INC.

DOANE CHRISTIAN INTERNATIONAL SCHOOL

FOUNDATION, INC. adopted significant accounting policies which are in
compliance with the Philippine Financial Reporting Standards (PFRS) as well as
with the standards set by the Securities and Exchange Commission. These
accounting policies have been applied on a consistent basis. These accounting
policies conform in all material respects with the International Accounting
Standards.

The financial statements have been prepared on a historical cost basis. The
financial statements are presented in Philippine Peso which is the company’s
functional and presentation currency.

Statement of Compliance –The financial statements of the company have

been prepared in compliance with the Philippine Financial Reporting Standard
Council

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation – The financial statements have been prepared on the
historical cost basis in accordance with the applicable Philippine Accounting
Standards.The accompanying financial statements have been prepared in
accordance with Philippine Financial Reporting Standards (PFRS) for Small
and Medium-Sized Entities (SMES). It’s the company’s first financial
statements of operations.

PAS 1 - Presentation of Financial Statements

This standard sets out the overall requirements of financial

statements, including how they should be structured, the minimum
requirements for their content and overriding concepts such as going
concern, the accrual basis of accounting and the current/non-current
distinction. The standard requires a complete set of financial statements to
comprise a statement of financial position, a statement of profit and loss and
other comprehensive income, a statement of changes in equity and a
statement of cash flows.

The objective of PAS 1 is to prescribe the basis for presentation of

general purpose financial statements, to ensure comparability both with the
entity’s financial statement of previous period and with the financial
statements of other entities. PAS 1 sets out the requirements for the
presentation of statements, guidelines for their structure and minimum
requirements for their content.

PAS 7- Statement of Cash Flow

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FOUNDATION, INC.

The standard requires an entity to present a statement of cash flow as

an integral part of the primary financial statements. Cash flows are classified
and presented into operating activities (either using the “direct” method),
investing activities or financing activities, with the latter two categories
generally presented on a gross basis.

The objective of PAS 7 is to require the presentation of information

about the historical charges in cash and cash equivalents of an entity by
means of a statement of cash flows, which classifies cash flows during the
period according to operating, investing and financing activities.

PAS 8- Accounting Policies, Changes in Accounting Estimates and

Errors

This is applied in selecting and applying for changes in estimates and

reflecting corrections of prior period errors. The standard requires
compliance with any specific PFRS applying to a transaction, event or
condition, an provides guidance on developing accounting policies for other
items that result in relevant and reliable information. Changes in accounting
policies and correction of errors are generally retrospectively accounted for,
whereas changes in accounting estimates are generally accounted for on a
prospective basis.

PAS 10 - Events after the Reporting Period

This standard contains requirements for when event after the end o
the reporting period should be adjusted in the financial statements.
Adjusting events are those providing evidence of conditions arising after the
reporting period (the latter being disclosed where material).

PAS 12 - Income Taxes

This standard prescribes the accounting treatment for the deferred

income taxes. This standard requires the use of the balance sheet liability
method in accounting for deferred income taxes. It requires the recognition
of a deferred tax liability and subject to certain conditions a deferred tax
asset for all temporary differences with certain expectations. This standard
provides for the recognition of a deferred tax asset when it is probable the
taxable income will be available against which deferred tax asset can be
used.

PAS 16 - Property, Plant and Equipment

This standard outlines the accounting treatment for most types of

property, plant and equipment. Property, Plant and Equipment is initially
measured at cost, subsequently measured either using a cost or revaluation

Notes to Financial Statements Page 3

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model, and depreciated so that its depreciable amount is allocated on a

systematic basis over its useful life.

PAS 36 - Impairment Assets

This standard seeks to ensure that an entity’s assets are not carried
at more than their recoverable amount (i.e. the higher the fair value less
costs of disposal and value in use. With exception of goodwill and certain
intangible assets for which an annual impairment test is required, to
conduct impairment tests where there is an indication of impairment of an
asset, and the test may be conducted for a “cash-generating unit” where an
asset does not generate cash inflows that are largely independent of those
from other assets.

PAS 39 - Financial Instruments: Recognition and Measurement

This standard outlines the requirements for the recognition and

measurement of financial assets. Financial liabilities and some contracts to
buy or sell non-financial items. Financial instruments are initially recognized
when an entity becomes a party to the contractual provisions of the
instrument, and are classified into various categories depending upon the
type of instrument, which then determines the subsequent measurement
the instrument (typically amortized cost or fair value). Special rules apply to
embedded derivatives and hedging instruments.

PAS 32- Financial Instruments: Disclosure and Presentation

Defines a financial instrument at any contract that gives rise to both

financial assets of one entity and a financial liability of equity instrument or
another entity.

A financial asset is any asset that is:

a. Cash
b. A contractual right to receive cash or another financial asset from
another entity.
c. A contractual right to exchange financial instruments with another
entity under conditions that are potentially favourable. An example
is an option to purchase shares of another entity at less than
market

PAS 39- Loans and Receivables

Defines Loans and Receivables as non-derivative financial assets with

fixed or determinable payments that or not quoted in an active market. PAS

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39, paragraph 46 provides that loans and receivables shall be measured at

amortized cost using the effective interest method.

A financial liability is any liability that is contractual obligation:

a. To deliver cash or other financial asset to another entity

b. To exchange financial instruments with another entity under
conditions that are potentially unfavourable.

Financial Risks Management and Objective Policy

The entity’s principal financial instruments comprise cash and

cash equivalents. The main purpose of these financial instruments is to
finance the entity’s operations.

a. Credit Risk – this is the risk that one party to a financial instrument will
cause a financial loss to the other party by failing to discharge an
obligation. The entity trades only with recognized, credit worthy third
parties. It is the entity’s policy that all customers who wish to trade on
credit terms are subject to credit verification procedures. In addition,
receivable balances are monitored on an ongoing basis with result that
the entity’s exposure to bad debts is not significant.

b. Liquidity Risk – this is the risk that an entity will encounter difficulty
meeting obligations associated with a financial liability. The company
minimizes the exposure to liquidity risk by ensuring the availability of
liquid assets to meet short term funding and regulatory requirements.
The entity regularly evaluates its projected and actual cash flow
information.

c. Market Risk – this is a risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market places.

Cash and Cash Equivalents – Cash includes cash on hand and in banks. 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 from thedate of acquisition and are subject to an
insignificant risk of change in value.

Trade and Other Receivables – Most sales are made on the basis of normal credit
terms, and the receivables do not bear interest. Where credit is extended
beyond normal credit terms receivables are measured at amortized cost
using the effective interest method. At the end of each reporting period that
carrying amounts of trade and other receivables are revised to determine
whether there is any objective evidence that the amounts are not
recoverable. If so, an impairment loss is recognized immediately in profit and
loss.

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Other Assets –other assets are miscellaneous assets that cannot be classified as
current asset, fixed asset, or intangible assets. Examples of this account
include deferred tax assets, bond issue costs, advances to officers, prepaid
pension costs, and long-term prepayments – rental deposit.

Taxes Payable – includes statutory obligation as of the end of the period such as
VAT payable and Income Tax Payable.

Trade Payable – amount or obligation billed to a company by its suppliers for

goods and services consumed by the company in the ordinary course of the
business. Trade payables are recognized initially and subsequently
measured at the transaction price and based normal credit terms and do not
bear interest.

Accounts Payable-Non Trade – amounts or obligations of the company due for

payment to an entity other than its normal supplier which are not attached
or related directly to the company’s primary operations.

Advances from Shareholders/Stockholders – include cash advances from

stockholders to be used as additional working capital. This is not interest
bearing and do not have a deposit date for payment.

Mortgage Payable – is the liability of a property owner to pay a loan that is secured
by property.

Members’ Equity–is composed of the Members contributions and excess/loss of

receipts (dues) over disbursements.

Revenues –revenues are recognized to the extent that it is probable that the
economic benefits associated with the transactions will flow to the entity and
the amount of the Revenue can be measured reliably regardless of when the
payment is being made. Revenue is measured at the fair value of the

consideration received or receivable, taking into account contractually

defined terms of payment and excluding taxes or duty. The company
assesses its revenue arrangements against specific criteria in order to
determine if it is acting as principal or agent. The company has concluded
that it is acting as a principal in all of its revenue arrangements.

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Cost and Expense Recognition – costs and expenses are recognized in the
statement of income when there is a decrease in future economic benefits
related to a decrease in an asset or an income liability arises that can be
measured reliably. Expenses are recognized in the statement of
comprehensive income on the basis of a direct association between the costs
incurred and the earnings of specific items of income on the basis of
systematic and rational procedure when the economic benefits are expected
to arise over several accounting periods and the association with income can
only be determined or immediately when an expenditure produces no future
economic benefits or when and to the extent that future economic benefits
do not qualify, or cease to qualify, for recognition in the statement of
financial position as an asset.

Costs and expenses decreases in economic benefits during the

accounting period in the form of outflows or decrease of assets or incurrence
of liabilities that result in decrease in fund balance. Costs and expenses are
recognized in the statement of revenues and expenses in the year these are
incurred.

Leases – Leases are classified as operating leases. Rental payables under operating
leases are charge to profit or loss in a straight-line basis over the term of the
relevant lease.

Borrowing Costs – All other borrowing costs are recognized as expense in the
statement of income when incurred.

Current Income Tax – Current income tax assets and liabilities for the current
period are measured at the amount expected to be recovered from or paid to
the taxation. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted at reporting date.

Employee Benefits

Short-Term Benefits – the company recognized a liability net of amounts

already paid and an expense for services rendered by employees during the
accounting period. Short-term benefit given by the Company to its employees
includes salaries and wages, Social Security Contribution, Philhealth and
Pag-ibig.

Long Term Benefits – the company has not yet provided long term- benefits
to its employees mandated by law.

Contingencies – contingent liabilities are not recognized in the financial statement.

They are disclosed in the notes to the financial statements unless the
possibility of an outflow of resources embodying the economic benefits is
remote. Contingent assets are not recognized in the financial statements but

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are disclosed in the notes to financial statements when an inflow of

economic benefits is probable.

Events after the end of Reporting Period – any post year events that provides
additional information about the corporation’s position at the end of the
reporting period (adjusting event) is reflected in the financial statements.
Post year events that are not adjusting events, if any, are disclosed when
material to the consolidated financial statements.

The Use of Estimates and Judgment – the preparation of the financial statement
requires management to make estimate and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. The estimates and associated assumptions
are based on historical experience and various other factors that are believed
to be reasonable under the circumstances, the result of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.

Notes to Financial Statements Page 8