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014 – Presentation Reconciliation of Retained Earnings

Bulletin No.

Date

Subject Matter

Clarification/Details

014

24 January 2013

Presentation Reconciliation of Retained Earnings

Under paragraph 4(C) of SRC Rule 68, as amended, issuers of securities to the public, and stock corporations with unrestricted retained earnings in excess of 100% of paid-in capital stock, are mandated to submit with their audited financial statements a Reconciliation of Retained Earnings Available for Dividend Declaration which should present the prescribed adjustments as indicated in Annex 68-C of the Rule.

 

The amount of retained earnings of a company should be based on its separate (“stand alone”) financial statements and not on its consolidated financial statements if it is a parent company.  This is because the retained earnings based on the consolidated financial statements include surplus of the subsidiaries which are not yet actual earnings of the parent unless released by the subsidiaries in the form of dividends. The reconciliation of retained earnings of the parent company shall however, be submitted with the consolidated financial statements pursuant to SRC Rule 68, as amended.

 

To avoid inconsistencies in the balances, the Reconciliation should be presented as follows:

 

Items

Amount

Unappropriated Retained Earnings, beginning

P    x x x

Adjustments:

(see adjustments in previous year’s Reconciliation)

 

P    x x x

Unappropriated Retained Earnings, as adjusted, beginning

P   x x x

Net Income based on the face of AFS

Less: Non-actual/unrealized income net of tax               

•     Equity in net income of associate/joint venture    

•     Unrealized foreign exchange gain - net (except those attributable to Cash and Cash Equivalents) Unrealized actuarial gain

•     Fair value adjustment (M2M gains)      

•     Fair value adjustment of Investment Property resulting to gain Adjustment due to deviation from PFRS/GAAP-gain

•     Other unrealized gains or adjustments to the retained earnings as a result of certain transactions accounted for under the PFRS

Add: Non-actual losses

•       Depreciation on revaluation increment (after tax)

•       Adjustment due to deviation from PFRS/GAAP – loss  

Loss on fair value adjustment of investment property (after tax)

Net Income Actual/Realized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

P   x x x

Unappropriated Retained Earnings, as adjusted, ending

P   x x x