GOD's MASTERPIECE LEASING COMPANY

#120 Brgy. Polo, San Carlos City, Pangasinan

2017 FINANCIAL STATEMENTS

CONTENTS PAGE

COVER PAGE 1

STATEMENT OF MANAGEMENT'S RESPONSIBILITY 2

INDEPENDENT AUDITOR'S REPORT 3

INCOME STATEMENT 5

BALANCE SHEET 6

STATEMENT OF CHANGES IN EQUITY 7

CASH FLOW STATEMENT 8

NOTES TO THE FINANCIAL STATEMENTS 9-14

1
GOD'S MASTERPIECE LEASING
COMPANY
#120 Brgy. Polo, San Carlos City, Pangasinan

2017 FINANCIAL STATEMENTS

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2017

2
3
4
 5

INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2017 AND 2016

2017 2016
₱ ₱

REVENUES

RENT INCOME 4 ( 765,859) 689, 055

OTHER INCOME 5
- -

TOTAL

COSTS AND EXPENSES

ADMINISTRATIVE COSTS 13 ( 93,787)

DEPRECIATION COSTS 13 #REF!

OTHER EXPENSES 14 #REF!

TOTAL #REF!

NET INCOME BEFORE TAX ( 765,859)

INCOME TAX 15

NET INCOME

BALANCE SHEET

AS AT DECEMBER 31, 2017 AND 2016

2017 2016
NOTES ₱ ₱
ASSETS

NON CURRENT ASSETS

Property & Equipment 2 #REF! - 65,037,255-
#REF! - 65,037,255-

CURRENT ASSETS

Prepayments 5 #REF! #REF!

Trade and other receivables 8 ( 3,371,294) #REF!
Cash and Cash equivalents 17 ( 17,478,535) #REF!
#REF! #REF!

TOTAL ASSETS #REF! #REF!

EQUITY AND LIABILITIES

OWNER'S CAPITAL
Owner's Name, Capital 9 - 1,652,250-

CURRENT LIABILITIES

Current Tax Liabilities 7 ( 1,546,021) ( -  )

Accrued Expenses ( 1,546,021) #REF!
( 3,092,042) #REF!

TOTAL EQUITY AND LIABILITIES #REF! #REF!

 7

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2017

OWNER'S LNAME, OWNER'S

CAPITAL DRAWINGS TOTAL

₱ ₱ ₱

As at January 1, 2016 ( -  )

Net Income for the year

Withdrawals during the year

At December 31, 2016 ( -  ) ( -  ) ( -  )

As at January 1, 2017 ( -  ) ( -  ) ( -  )

Net Income for the year

Withdrawals during the year

At December 31, 2017 ( -  ) ( -  ) ( -  )

 8

CASHFLOW STATEMENT

FOR THE YEAR ENDED 31ST DECEMBER 2017 AND 2016

Notes ₱ ₱
CASHFLOW FROM OPERATING ACTIVITIES
Net Income for the year
Adjustment for ; Depreciation
( -  ) ( -  )
WORKING CAPITAL CHANGES
Changes in accrued expenses
Changes in current tax liabilities
Changes in trade and other receivables
Changes in prepayments
( -  ) ( -  )

Cash generated from operating activities

CASHFLOW FROM INVESTING ACTIVITIES

Acquisition of property and equipment

Net cash from investing activities ( -  ) ( -  )

CASHFLOW FROM FINANCING ACTIVITIES

Net cash from financing activities

NET INCREASE/(DECREASE) IN CASH ( -  ) ( -  )

CASH AND CASH EQUIVALENT AT

BEGINNING OF YEAR ( -  ) ( -  )

CASH AND CASH EQUIVALENT AT END OF

YEAR ( -  ) ( -  )
 9

NOTES TO THE FINANCIAL STATEMENTS

AS AT AND FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

1. GENERAL INFORMATION

YOUR NAME is engaged in the business of leasing commercial spaces to clients with business name YOUR
BUSINESS NAME which is duly registered with the Department of Trade and Industry (DTI). The address of
the business is YOUR ADDRESS.

The Financial statements of the business for the year ended December 31, 2017 were authorized for issue by the
proprietor on March 28, 2018. The Proprietor is still empowered to make revision even after the date of issue.

2. ACCOUNTING POLICIES

a) Basis of preparation

The financial statements have been prepared under PFRS for SMEs.

b) Property and equipment

All property and equipment is initially recorded at cost and is stated at historical cost less accumulated
depreciation.

c) Depreciation

Property and equipment are depreciated on a reducing balance basis at rates calculated to write them off to a
residual value over their expected useful life.

The following rates have been used :

RATES %

Land Nil
Building
Office Furniture, Fixtures and Equipment
d) Revenues

Revenue is recognized to the extent that is probable that the economic benefits will flow to the Business and the
amount can be reliability measured. However, when an uncertainty arises about the collectability of an amount
already included in the revenue, the uncollectible amount is recognized as an expense, rather than as an
adjustment to revenue account.

e) Costs and Expenses

Cost and administrative expenses are recognized in the statement of income upon utilization of the service or in
the date they are incurred.
 10

NOTES TO THE FINANCIAL STATEMENTS (continued)

AS AT AND FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

f) Prepayments

Prepayments are stated at cost lesscost to sell.

g) Trade and Other Receivables

Trade receivables represents accounts receivable and are measured initially at invoice price and subsequently
measured at their fair value as reduced by appropriate allowances for doubtful accounts and impairment, if any.

Other receivables are measured at transaction cost. Other receivables include advances to employees and other
individuals.

h) Cash

Cash includes cash in bank, are measured at face value. Cash in banks are deposits held with banks. The sole
trader reconciles the books and bank balances regularly as part of the cash monitoring and internal measures
implemented.

i) Current Tax Liabilities

Other current liabilities include statutory obligation as of the end of the period such as withholding taxes payable,
sales taxes and income tax payable.

j) Accrued Expenses
Other current liabilities include statutory obligation as of the end of the period such as withholding taxes payable,
sales taxes and income tax payable.

k) Owner's Capital
Total capital comprises of the amount invested by the proprietor as business fund and cumulative earnings of the
current and previous years, diminished by periodic withdrawals by the owner.

3. MANAGEMENT SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The estimates and assumptions used in the financial statements are based upon management’s evaluation of
relevant facts and circumstances. Actual results could differ from such estimates.

Estimating useful lives of Property and Equipment

The entity shall review its present depreciation method and, if current expectations differ, change the
depreciation to reflect the new pattern if circumstances indicate significant changes.

Revenue Recognition
Revenue recognition policies require the use of estimates and assumptions that may affect the reported
amounts of revenues and receivables. Differences between the amounts recognized and actual settlements are
taken up in the accounts upon reconciliation.

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 NOTES TO THE FINANCIAL STATEMENTS (continued)

AS AT AND FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

4. PROPERTY AND EQUIPMENT

OFFICE FURNITURE
LAND BUILDING & EQUIPMENT TOTAL
COST ₱ ₱ ₱ ₱

At January 1, 2017 0

Additions 0

At December 31, 2017 ( -  ) ( -  ) 0 0

ACCUMULATED DEPRECIATION

At January 1, 2017 0

Depreciation for the year 0

At December 31, 2017 ( -  ) 0 0

NET BOOK VALUE

At December 31, 2017 ( -  ) ( ( -  ) ( ( -  ) ( ( -  )

At December 31, 2016

Additions to costs of the business property and equipment account includes the acquisition of a new __________
amounting to ₱ 9,999 and capitalizable cost of repairs which amounted to ₱ 8888. Related depreciation for the
additions were pro-rated using the month of purchase. Net book values approximate the fair values of the
property and equipment of the business.

12

NOTES TO THE FINANCIAL STATEMENTS (continued)

AS AT AND FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

2017 2016
₱ ₱
5. RENT INCOME
Space Rentals ( 6,481,594) - 5,918,875-

The leasing business caters to regular tenants (lessees), namely, XXX, YYY, ZZZ etc at ₱9,999, ₱ 8888 and ₱
777 per month, respectively.

4 OTHER INCOME
Interest on Bank Deposits ( 1,484,130) - 1,260,440-
 Idle funds are maintained in bank account(s) of the lessor for future repairs and improvements of the leased
building. The deposits yield interest at the prevailing bank rates, net of 20% final tax.

13 ADMINISTRATIVE COSTS
Utilities
Stationery and Supplies
Light and water
Security
Insurance
Repairs and Maintenance
( -  ) - -  -

Administrative costs represent payments for the building adminstration expenses that facilitates the leasing
business of the owner. Included are: Utilities for following up payments of the tenants; b. supplies for lease
contracts, record books and receipts, and other paper works; c. Light and water for night illuminations and daily
cleansing of common areas; d. Security expenses also include such as CCTVs maintenance and other security
devices; e. Insurance for the building is comprehensive policy that covers reasonable amount insured and f.
repairs and maintenance for minor repairs incurred for building like replacement of broken windows, galvanized
sheets and others.

13 OTHER EXPENSES
Taxes and Licences
Professional Fees
Miscellaneous
( -  ) - -  -

Professional fees include bookkeeping services paid to a practicing accountant who handles the business'
compliances to regulatory agencies of the government. Taxes and licenses include mandatory payments of fees
and taxes, as enumerated on the next page. Miscellaneous expenses include payments for notarial services of
lease contracts, pest controls, among others.

13

NOTES TO THE FINANCIAL STATEMENTS (continued)

AS AT AND FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

2017 2016
Taxes and licenses for the year are: ₱ ₱
a. Percentage Tax Paid
b. Real Estate Taxes on Land and Building
c. LGU Business Taxes (including CTC)
d. BIR Annual Registration Fee

6 INCOME TAX EXPENSE

Net Income Before Tax ( -  ) ( -  )

Less Personal and Additional Exemption ( -  ) ( -  )
Payments for SSS, Philhealth and Medical Insurances ( -  ) ( -  )
Net Taxable Income ( -  ) ( -  )
Application of graduated tax rates
 Income Tax Expense

Less Creditable Income Tax Withheld (Form 2307)

Income Tax Payments (1st, 2nd and 3rd Quarters)
Income Tax Payable ( -  ) ( -  )

Tax base for the net taxable income of the business is within the level of the third bracket of the tax table that is
used for taxable year 2017. Tax credits such as the 5% Creditable Tax Withheld by the Lessees and the
Quarterly Income Taxes payments are deducted from the total income tax expense to determine the income tax
expense that is still due to the BIR.

7 CURRENT TAX LIABILITIES

Percentage Taxes Payable
Withholding Taxes Payable
Income Tax Payable
( -  ) ( -  )

The business recognizes its tax obligations at cut-off date. These are due on the following months. Taxes
withheld for the income payments to suppliers were provided with corresponding Certificates of Tax Withheld,
duly signed by the lessor.

7 ACCRUALS
Light and Water
Utilities
LGU Business Taxes
( -  ) ( -  )

Light and Water, Utilities and LGU Business Taxes are expenses that are incurred during the taxable year but are
settled or paid in the succeeding year. The accrued expenses recognized are computed pro-rata using historical
information of the past years.
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NOTES TO THE FINANCIAL STATEMENTS (continued)

AS AT AND FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

2017 2016
₱ ₱
8 Prepayments
Unexpired Insurance
Unused Suppies
( -  ) ( -  )

Unexpired portion of the building insurance covers the succeeding months of the following year. Supplies that
can be used in the following period are also recognized as current assets.

8 TRADE RECEIVABLES
Accrued Rent Receivables
Others
( -  ) ( -  )

The lease agreement provided for varied dates of rent payments of the lesees. Pro-rated computations
considering the cut-off date are presented as accruals of rent income that are already earned but lessee's payments
are not yet received. Other receivables account for advances made from the sole proprietor.
 The lease agreement provided for varied dates of rent payments of the lesees. Pro-rated computations
considering the cut-off date are presented as accruals of rent income that are already earned but lessee's payments
are not yet received. Other receivables account for advances made from the sole proprietor.

8 CASH
Cash in Bank #REF! ( -  )

The lessor maintains a deposit account in a reputable bank in the area. Lessees were given option to deposit their
rent payments in this bank account which yields interest that is computed based on the average daily balance of
the bank account.

18 CURRENCY
These financial statements are presented in Philippine Peso.

19 REGISTERED OFFICE
The registered office of the Business is at the location of the leased property (or at the residence
of the Lessor at No. 99 Barangay Ginebra, Sta Barbara, Pangasinan.
JOURNAL ENTRIES FOR 2017
DEBIT CREDIT

a. Cash 710858.77
Revenue 710858.77

b. Business Insurance Expense 28434.35

Cash 28434.35

c. Bad Debts Expense 7108.59

Allowance for Bad debts Expense 7108.59

d. Supplies Expense 14217.18

Cash 14217.18

e. LGU business tax 4976.01

Cash 4976.01

f. Real Property Tax 8175

Cash 8175

g. Utilities Expense 5988

Cash 5988

h. Maintenance Expense 31875

Cash 31875

Balance Sheet

a. Cash 5000
Rent Revenue 5000

5000
 5000

Rent Receivables 5000

Acrrued Rent Revenue 5000

b. Percentage Tax 4482.44

Percentage tax payable 4482.44

Percenge tax Payable 16843.32

cash 16843.32

c. Light and water Expense 1733.75

acrrued light and water payable 1733.75

d. unexpired bldg. insurance 7108.59

bldg. insurance 7108.59

e. Supplies 8885.73
Cash 8885.73

supplies expense 14217.18

supplies 14217.18

f. Owner's Drawing 249999.5

cash 249999.5

g. Dep'n expense 100000

accumulated Dep'n 100000

income summary 884666.29

owner's capital 884666.29