Notes To Financial Statements Reference

Pangasinan State University
Consolidated Financial statements for the year ended December 31, 2016
Notes to Financial Statements Reference
Pangasinan State University PPSAS 1

Notes to Consolidated Financial Statements
For the year ended December 31, 2016
1. General Information/Agency Profile
The Consolidated Financial Statements of Pangasinan State University were

authorized for issue on February 10, 2017 as shown in the Statement of Management PPSAS
Responsibility for Financial Statements signed by Dr. Dexter R. Buted, the 1.63(b)
Pangasinan State University’s President. PPSAS 14.26
Pangasinan State University (PSU) is a public non-sectarian, non-profit institution of

Tertiary and Higher learning principally supported by State Funds. It was chartered PPSAS 1.150
through the issuance of Presidential Decree No. 1497 promulgated on June 11, 1978 PPSAS ,
and became operational on July 1, 1979.
PSU’s mandate is to serve as an instrument towards the rapid development of the

natural and manpower resources of Region 1, particularly of the Province of
Pangasinan. The University will provide better services in professional and technical
training in the arts, sciences, humanities, and technology and in the conduct of
scientific research and technological studies. The University shall provide advanced
instruction in the arts, agricultural and natural sciences as well as in technological
and professional fields.
PSU’s vision is to become an ASEAN Premier State University in 2020.
PSU’s mission: The Pangasinan State University, through instruction, research,

extension and production commits to develop highly principled, morally upright,
innovative and globally competent individuals capable of meeting the needs of
industry, public service and civil society.
As PSU started its operation in 1979, it operates two colleges of Agriculture

in Sta. Maria and San Carlos, two colleges of Arts and Trade in Lingayen and
Asingan, College of Education in Bayambang and College of Fisheries in
Binmaley. At present, the University has nine campuses located in the
different areas of Pangasinan. These are:
1. Bayambang Campus which is among the constituent campus of PSU

that actively house a Laboratory High School. It is known in its Basic
Education Curriculum, Arts and Sciences and Bachelor of Science in
Nursing.
2. Asingan Campus, located at Asingan Pangasinan. Originally created as
College of Arts and Technology has now various curricular programs in
Industrial Technology and Industrial Education.
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3. Sta. Maria Campus, located at Cuangao, Sta. Maria Pangasinan is also
one of the agricultural school of the PSU.
4. San Carlos Campus, which was among the first campuses established in
the PSU System and offers Agricultural Technology.
5. Binmaley Campus, known as PSU’s College of Fisheries.
6. Infanta Campus, located at Bamban, Infanta has a wide agricultural and
forest reserves which serve as training ground on agricultural education.
It became operational in 1981.
7. Lingayen Campus, located at Alvear St. Lingayen Pangasinan where
College of Arts and Science and College of Technology is located. The
Lingayen Campus is the home of the Main Administration Offices. The
Lingayen Campus started operation in 1982.
8. Urdaneta Campus, situated at San Vicente, Urdaneta City, Pangasinan
primarily offers programs in engineering and architectural education. It
started its operation in 1987.
9. Alaminos Campus, located at Bolaney Alaminos, Pangasinan was
created in 2009 upon endorsement of the Sanguniang Panlungsod of
Alaminos City.
In addition, Pangasinan State University has two academic programs

known as PSU Graduate School and Open University System.
In 2016, PSU’s implementation of Quality Management System provided

the following quality policy:
The Pangasinan State University shall be recognized as an ASEAN

Premier State University that provides quality education and satisfactory
service delivery through instruction, research, extension and production.
We commit our expertise and resources to produce professionals who meet

the expectations of the industry and other interested parties in the national
and international communities.
We shall continuously improve our operations in response to the changing

environment and in support of the institution’s strategic direction.
The Agency's registered Main office is located in Alvear St. Poblacion, Lingayen
Pangasinan.
.
2. Statement of Compliance and Basis of Preparation of Financial Statements
The Consolidated financial statements have been prepared in accordance with and PPSAS 1.129
comply with the Philippine Public Sector Accounting Standards (PPSAS) issued by PPSAS 2
the Commission on Audit per COA Resolution No. 2014-003 dated January 24, 2014. PPSAS 6
The Consolidated financial statements have been prepared on the basis of historical
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cost, unless stated otherwise. The Statement of Cash Flows is prepared using the
direct method.
3. Summary of Significant Accounting Policies
3.1 Basis of accounting
The Consolidated financial statements are prepared on an accrual basis in PPSAS 1, 6

accordance with the Philippine Public Sector Accounting Standards (PPSAS).
3.2 Consolidation
a. Consolidated Entities
The Consolidated financial statements reflect the assets, liabilities, revenues,

and expenses of the nine campuses maintained by the University of which it
has complete control. These campuses or entities are PSU Asingan, PSU PPSAS 6
Bayambang, PSU Binmaley, PSU Infanta, PSU San Carlos, PSU Sta. Maria,
PSU Urdaneta, and PSU Main which included in its campus consolidated
report PSU Lingayen, PSU Alaminos, PSU Graduate School and PSU Open
University System. These entities are given the authority to maintain its own
books and disburse funds which are transferred to their respective accounts.
Funds transferred to these respective entities are based on the centralized
obligation system of the University, thus, reports on obligations and budget
utilization are reported in the Main office and each entities reports utilization
of the funds transferred.
b. Interest in joint venture
The Pangasinan State University has no existing interest in a joint venture. PPSAS 8
c. Investment in government business enterprises
PSU do not have any acquisitions of business enterprises either by merger or

consolidation.
d. Trusts under administration
No trusts administered by any entity are held by Pangasinan State University.
3.3 Financial instruments
a. Financial assets
Initial recognition and measurement

Financial assets within the scope of PPSAS 29-Financial Instruments:
Recognition and Measurement are classified as financial assets at fair value PPSAS 29.10
through surplus or deficit, held-to-maturity investments, loans and PPSAS 30.31
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receivables or available-for-sale financial assets, as appropriate. The
Pangasinan State University determines the classification of its financial
assets at initial recognition.
Purchases or sales of financial assets that require delivery of assets within a

time frame established by regulation or convention in the marketplace PPSAS 29.40
(regular way trades) are recognized on the trade date, i.e., the date that the
Pangasinan State University commits to purchase or sell the asset.
At present, the Pangasinan State University has no financial assets either

cash or short-term deposits; trade and other receivables; loans and other
receivables; quoted and unquoted financial instruments; and derivative
financial instruments.
b. Financial liabilities
Initial recognition and measurement

Financial liabilities within the scope of PPSAS 29 are classified as financial
liabilities at fair value through surplus or deficit or loans and borrowings, as PPSAS 29.10
appropriate. The entity determines the classification of its financial
liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and, in the case of
loans and borrowings, plus directly attributable transaction costs. PPSAS 29.45
PPSAS 29.49
The Pangasinan State University’s financial liabilities include only trade and
other payables.
3.4 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash at bank, deposits on PPSAS 2.8
call and highly liquid investments with an original maturity of three months or PPSAS 2.9
less, which are readily convertible to known amounts of cash and are subject to PPSAS 2.56
insignificant risk of changes in value. For the purpose of the consolidated
statement of cash flows, cash and cash equivalents consist of cash and short-term
deposits as defined above, net of outstanding bank overdrafts.
3.5 Inventories
Inventory is measured at cost upon initial recognition. To the extent that
inventory was received through non-exchange transactions (for no cost or for a PPSAS 12.15
nominal cost), the cost of the inventory is its fair value at the date of acquisition. PPSAS
12.17(a)
Costs incurred in bringing each product to its present location and condition are
accounted for, as follows: PPSAS 12.16
PPSAS 12.18
 Raw materials: purchase cost using the weighted average cost method
 Finished goods and work in progress: cost of direct materials and labor and a
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proportion of manufacturing overheads based on the normal operating
capacity, but excluding borrowing costs
After initial recognition, inventory is measured at the lower of cost and net
realizable value. However, to the extent that a class of inventory is distributed or
deployed at no charge or for a nominal charge, that class of inventory is
measured at the lower of cost and current replacement cost.
Net realizable value is the estimated selling price in the ordinary course of PPSAS 12.35
operations, less the estimated costs of completion and the estimated costs PPSAS 12.20
necessary to make the sale, exchange, or distribution. PPSAS 12.21
Inventories are recognized as an expense when deployed for utilization or PPSAS 12.9
consumption in the ordinary course of operations of the Pangasinan State
University.
3.6 Investment Property
Investment properties are measured initially at cost, including transaction costs. PPSAS 16.26
The carrying amount includes the replacement cost of components of an existing PPSAS
investment property at the time that cost is incurred if the recognition criteria are 16.86(a)
met and excludes the costs of day-to-day maintenance of an investment property.
Investment property acquired through a non-exchange transaction is measured at PPSAS 16.27

its fair value at the date of acquisition. Subsequent to initial recognition, PPSAS 16.39
investment properties are measured using the cost model and are depreciated PPSAS 16.42
over its estimated useful life of [number] years.
Investment properties are derecognized either when they have been disposed of PPSAS 16.77
or when the investment property is permanently withdrawn from use and no PPSAS 16.80
future economic benefit or service potential is expected from its disposal. The PPSAS 16.66
difference between the net disposal proceeds and the carrying amount of the PPSAS 16.71
asset is recognized in the surplus or deficit in the period of derecognition.
Transfers are made to or from investment property only when there is a change in PPSAS 16.74
use. PPSAS 16.39
The Pangasinan State University uses the cost model for the measurement of PAG2 of
investment property after initial recognition. PPSAS 16
3.7 Property, Plant and Equipment
Recognition
An item is recognized as property, plant, and equipment (PPE) if it meets the PPSAS 17.13
characteristics and recognition criteria as a PPE.
The characteristics of PPE are as follows: PPSAS 17.14

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 tangible items;
 are held for use in the production or supply of goods or services, for
rental to others, or for administrative purposes; and
 are expected to be used during more than one reporting period.
An item of PPE is recognized as an asset if:
 It is probable that future economic benefits or service potential

associated with the item will flow to the entity; and
 The cost or fair value of the item can be measured reliably.
Measurement at Recognition
An item recognized as property, plant, and equipment is measured at cost. PPSAS 17.26
A PPE acquired through non-exchange transaction is measured at its fair value as PPSAS 17.27
at the date of acquisition.
The cost of the PPE is the cash price equivalent or, for PPE acquired through PPSAS 17.37
non-exchange transaction its cost is its fair value as at recognition date.
Cost includes the following: PPSAS 17.30
 Its purchase price, including import duties and non-refundable purchase

taxes, after deducting trade discounts and rebates;
 expenditure that is directly attributable to the acquisition of the items;

and
 initial estimate of the costs of dismantling and removing the item and
restoring the site on which it is located, the obligation for which an entity
incurs either when the item is acquired, or as a consequence of having
used the item during a particular period for purposes other than to
produce inventories during that period.
Measurement After Recognition
After recognition, all property, plant and equipment are stated at cost less PPSAS 17.43
accumulated depreciation and impairment losses. PAG2 of
PPSAS 17
When significant parts of property, plant and equipment are required to be PPSAS 17.24
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replaced at intervals, the Pangasinan State University recognizes such parts as PPSAS 17.25
individual assets with specific useful lives and depreciates them accordingly.
Likewise, when a major repair/replacement is done, its cost is recognized in the
carrying amount of the plant and equipment as a replacement if the recognition
criteria are satisfied.
All other repair and maintenance costs are recognized as expense in surplus or PPSAS 17.23
deficit as incurred.
Depreciation
Each part of an item of property, plant, and equipment with a cost that is PPSAS 17.59
significant in relation to the total cost of the item is depreciated separately.
The depreciation charge for each period is recognized as expense unless it is PPSAS 17.64
included in the cost of another asset.
Initial Recognition of Depreciation
Depreciation of an asset begins when it is available for use such as when it is in PAG3 of
the location and condition necessary for it to be capable of operating in the PPSAS 17
manner intended by management.
For simplicity and to avoid proportionate computation, the depreciation is for

one month if the PPE is available for use on or before the 15th of the month.
However, if the PPE is available for use after the 15th of the month, depreciation
is for the succeeding month.
Depreciation Method
The straight line method of depreciation is adopted unless another method is PAG4 of
more appropriate for agency operation. PPSAS 17
Estimated Useful Life
The Pangasinan State University uses the Schedule on the Estimated Useful Life PAG5 of
of PPE by classification prepared by COA. PPSAS 17
The Pangasinan uses a residual value equivalent to at least five percent (5%) of PAG6 of
the cost of the PPE. PPSAS 17
Impairment
An asset’s carrying amount is written down to its recoverable amount, or
recoverable service amount, if the asset’s carrying amount is greater than its
estimated recoverable service amount.
Derecognition
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PSU derecognizes items of property, plant and equipment and/or any significant
part of an asset upon disposal or when no future economic benefits or service PPSAS 17.82
potential is expected from its continuing use. Any gain or loss arising on PPSAS 17.83
derecognition of the asset (calculated as the difference between the net disposal PPSAS 17.86
proceeds and the carrying amount of the asset) is included in the surplus or
deficit when the asset is derecognized.
3.8 Intangible Assets
Recognition and Measurement
Intangible assets are recognized when the items are identifiable non-monetary PPSAS 31.26
assets without physical substance; it is probable that the expected future
economic benefits or service potential that are attributable to the assets will flow
to the entity; and the cost or fair value of the assets can be measured reliably.
Intangible assets acquired separately are initially recognized at cost. PPSAS 31.31
If payment for an intangible asset is deferred beyond normal credit terms, its cost PPSAS 31.39
is the cash price equivalent. The difference between this amount and the total
payments is recognized as interest expense over the period of credit unless it is
capitalized in accordance with the capitalization treatment permitted in PPSAS 5,
Borrowing Costs
Subsequent Expenditure on an Acquired In-process Research and

Development Project
Subsequent expenditure on an in-process research or development project PPSAS 31.41

acquired separately and recognized as an intangible asset is:
 Recognized as an expense when incurred if it is research expenditure;

 Recognized as an expense when incurred if it is development
expenditure that does not satisfy the criteria for recognition as an
intangible asset; and
 Added to the carrying amount of the acquired in-process research or

Development project if it is development expenditure that satisfies the
recognition criteria for intangible assets.
Intangible Assets Acquired through Non-Exchange Transactions
The cost of intangible assets acquired in a non-exchange transaction is their fair PPSAS
value at the date these were acquired. 31.42-43
Internally Generated Intangible Assets

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Internally generated intangible assets, excluding capitalized development costs, PPSAS 31.49
are not capitalized and expenditure is reflected in surplus or deficit in the period PPSAS 31.55
in which the expenditure is incurred.
Recognition of an Expense
Expenditure on an intangible item was recognized as an expense when it is

incurred unless it forms part of the cost of an intangible asset that meets the
recognition criteria of an intangible asset.
Subsequent Measurement
The useful life of the intangible assets is assessed as either finite or indefinite. PPSAS 31.87
Intangible assets with a finite life is amortized over its useful life: PPSAS 31.96
PPSAS 26.22
The straight line method is adopted in the amortization of the expected pattern of PAG3 of
consumption of the expected future economic benefits or service potential. PPSAS 31
PPSAS
31.117
An intangible asset with indefinite useful lives was not be amortized. PPSAS
31.106
Intangible assets with an indefinite useful life or an intangible asset not yet PPSAS
available for use were assessed for impairment whenever there is an indication 31.107
that the asset may be impaired.
The amortization period and the amortization method, for an intangible asset PPSAS
with a finite useful life, were reviewed at the end of each reporting period. 31.103
Changes in the expected useful life or the expected pattern of consumption of PPSAS
future economic benefits embodied in the asset were considered to modify the 31.108
amortization period or method, as appropriate, and were treated as changes in
accounting estimates. The amortization expense on an intangible asset with a
finite life is recognized in surplus or deficit as the expense category that is
consistent with the nature of the intangible asset.
Gains or losses arising from derecognition of an intangible asset were measured PPSAS
as the difference between the net disposal proceeds and the carrying amount of 31.112
the asset and were recognized in the surplus or deficit when the asset is
derecognized.
Research and development costs
The Pangasinan State University expenses research costs as incurred. PPSAS 31.52
Development costs on an individual project were recognized as intangible assets PPSAS 31.55
when the PSU can demonstrate:
 The technical feasibility of completing the asset so that the asset will be
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available for use or sale
 Its intention to complete and its ability to use or sell the asset
 How the asset will generate future economic benefits or service potential
 The availability of resources to complete the asset
 The ability to measure reliably the expenditure during development
Following initial recognition, intangible assets were carried at cost less any PAG2 of
accumulated amortization and accumulated impairment losses. PPSAS 31
PPSAS 31.73
Amortization of the asset begins when development is complete and the asset is PPSAS 26.23
available for use. PPSAS 26.73
It is amortized over the period of expected future benefit. PPSAS

31.121
During the period of development, the asset is tested for impairment annually
with any impairment losses recognized immediately in surplus or deficit.
3.9 Provisions
Provisions were recognized when the Pangasinan State University has a present PPSAS 19.22
obligation (legal or constructive) as a result of a past event, it is probable that an
outflow of resources embodying economic benefits or service potential will be
required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Where Pangasinan State University expects some or all of a provision to be PPSAS 19.63
reimbursed, for example, under an insurance contract, the reimbursement is
recognized as a separate asset only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the statement of financial PPSAS 19.64
performance net of any reimbursement.
Provisions were reviewed at each reporting date, and adjusted to reflect the PPSAS 19.69
current best estimate. If it is no longer probable that an outflow of resources
embodying economic benefits or service potential will be required to settle the
obligation, the provisions were reversed.
Contingent liabilities
PSU does not recognize a contingent liability, but discloses details of any PPSAS 19.35
contingencies in the notes to the financial statements, unless the possibility of PPSAS 19.36
an outflow of resources embodying economic benefits or service potential is PPSAS
remote. 19.100
Contingent assets
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PSU does not recognize a contingent asset, but discloses details of a possible PPSAS 19.39
asset whose existence is contingent on the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the PSU in the
notes to the financial statements.
Contingent assets were assessed continually to ensure that developments were

appropriately reflected in the financial statements. If it has become virtually
certain that an inflow of economic benefits or service potential will arise and the
asset’s value can be measured reliably, the asset and the related revenue are
recognized in the financial statements of the period in which the change occurs.
3.10 Changes in accounting policies and estimates
The Pangasinan State University recognizes the effects of changes in accounting PPSAS 3.27
policy retrospectively. The effects of changes in accounting policy were applied PPSAS 3.30
prospectively if retrospective application is impractical.
PSU recognizes the effects of changes in accounting estimates prospectively by PPSAS 3.41
including in surplus or deficit.
PSU correct material prior period errors retrospectively in the first set of PPSAS 3.47
financial statements authorized for issue after their discovery by:
 Restating the comparative amounts for prior period(s) presented in which

the error occurred; or
 If the error occurred before the earliest prior period presented, restating
the opening balances of assets, liabilities and net assets/equity for the
earliest prior period presented.
3.11 Revenue from non-exchange transactions
Recognition and Measurement of Assets from Non-Exchange Transactions
An inflow of resources from a non-exchange transaction, other than services in- PPSAS 23.31
kind, that meets the definition of an asset were recognized as an asset if the
following criteria were met:
 It is probable that the future economic benefits or service potential

associated with the asset will flow to the entity; and
 The fair value of the asset can be measured reliably.
An asset acquired through a non-exchange transaction is initially measured at its PPSAS 23.42
fair value as at the date of acquisition.
Recognition Revenue from Non-Exchange Transactions

28
An inflow of resources from a non-exchange transaction recognized as an asset PPSAS 23.44

is recognized as revenue, except to the extent that a liability is also recognized
in respect of the same inflow.
As Pangasinan State University satisfies a present obligation recognized as a PPSAS 23.45

liability in respect of an inflow of resources from a non-exchange transaction
recognized as an asset, it reduces the carrying amount of the liability recognized
and recognize an amount of revenue equal to that reduction.
Measurement of Revenue from Non-Exchange Transactions
Revenue from non-exchange transactions is measured at the amount of the PPSAS

increase in net assets recognized by the entity, unless a corresponding liability is 23.48-49
recognized.
Measurement of Liabilities on Initial Recognition from Non-Exchange

Transactions
The amount recognized as a liability in a non-exchange transaction is the best PPSAS 23.57
estimate of the amount required to settle the present obligation at the reporting
date.
Fees and fines not related to taxes
Pangasinan State University recognizes revenues from fees and fines, except PPSAS 23.89
those related to taxes, when earned and the asset recognition criteria were met.
Deferred income is recognized instead of revenue if there is a related condition
attached that would give rise to a liability to repay the amount.
Other non-exchange revenues were recognized when it is probable that the

future economic benefits or service potential associated with the asset will flow
to the entity and the fair value of the asset can be measured reliably.
Gifts and Donations
Pangasinan State University recognizes assets and revenue from gifts and PPSAS 23.95
donations when it is probable that the future economic benefits or service
potential will flow to the entity and the fair value of the assets can be measured
reliably.
PPSAS 23.96
Goods in-kind were recognized as assets when the goods were received, or there
is a binding arrangement to receive the goods. If goods in-kind were received
without conditions attached, revenue is recognized immediately. If conditions
were attached, a liability is recognized, which is reduced and revenue
recognized as the conditions were satisfied.
PPSAS 23.97
On initial recognition, gifts and donations including goods in-kind were
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measured at their fair value as at the date of acquisition, which were ascertained
by reference to an active market, or by appraisal. An appraisal of the value of an
asset is normally undertaken by a member of the valuation profession who holds
a recognized and relevant professional qualification. For many assets, the fair
value was ascertained by reference to quoted prices in an active and liquid
market.
Transfers
Pangasinan State University recognizes an asset in respect of transfers when the PPSAS 23.96
transferred resources meet the definition of an asset and satisfy the criteria for
recognition as an asset, except those arising from services in-kind.
Services in-Kind
Services in-kind were not recognized as asset and revenue considering the PPSAS 23.98
complexity of the determination of and recognition of asset and revenue and the PAG3 of
eventual recognition of expenses. PPSAS 23
Transfers from other government entities
Revenues from non-exchange transactions with other government entities and PPSAS 23.42
the related assets were measured at fair value and recognized on obtaining PPSAS 23.44
control of the asset (cash, goods, services and property) if the transfer is free
from conditions and it is probable that the economic benefits or service potential
related to the asset will flow to the Pangasinan State University and can be
measured reliably.
3.12 Revenue from Exchange transactions
Measurement of Revenue
Revenue was measured at the fair value of the consideration received or PPSAS 9.14
receivable.
Rendering of Services
The Pangasinan State University recognizes revenue from rendering of services PPSAS 9.19
by reference to the stage of completion when the outcome of the transaction can
be estimated reliably. The stage of completion is measured by reference to labor
hours incurred to date as a percentage of total estimated labor hours.
Where the contract outcome cannot be measured reliably, revenue is recognized PPSAS 9.25
only to the extent that the expenses incurred were recoverable.
Sale of Goods
30
Revenue from the sale of goods is recognized when the significant risks and PPSAS 9.28
rewards of ownership have been transferred to the buyer, usually on delivery of
the goods and when the amount of revenue can be measured reliably and it is
probable that the economic benefits or service potential associated with the
transaction will flow to the Pangasinan State University.
Interest income
Interest income is accrued using the effective yield method. The effective yield PPSAS 9.34
discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount. The method applies this yield
to the principal outstanding to determine interest income each period.
Dividends
Dividends or similar distributions were recognized when the Pangasinan State PPSAS 9.34
University’s right to receive payments is established.
Rental income
Rental income arising from operating leases on investment properties is PPSAS 9.34
accounted for on a straight-line basis over the lease terms and included in
revenue.
Royalties
Royalties were recognized as they were earned in accordance with the substance PPSAS 9.34
of the relevant agreement.
3.13 Budget information
The annual budget is prepared on a cash basis and is published in the government PPSAS 24
website.
A separate Statement of Comparison of Budget and Actual Amounts (SCBAA)

are prepared since the budget and the financial statements were not prepared on
comparable basis. The SCBAA was presented showing the original and final
budget and the actual amounts on comparable basis to the budget. Explanatory
comments are provided in the notes to the annual financial statements.
3.14 Impairment of Non-Financial Assets
Impairment of cash-generating assets
At each reporting date, PSU assesses whether there is an indication that an asset PPSAS 26.22
may be impaired. If any indication exists, or when annual impairment testing for PPSAS 26.13
an asset is required, the PSU estimates the asset’s recoverable amount. An asset’s
31

recoverable amount is the higher of an asset’s or cash-generating unit’s fair value
less costs to sell and its value in use and is determined for an individual asset,
unless the asset does not generate cash inflows that were largely independent of
those from other assets or groups of assets.
Where the carrying amount of an asset or the cash-generating unit (CGU) PPSAS 26.72
exceeds its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount.
In assessing value in use, the estimated future cash flows were discounted to PPSAS
their present value using a discount rate that reflects current market assessments 26.43-45
of the time value of money and the risks specific to the asset. In determining fair PPSAS 26.68
value less costs to sell, recent market transactions were taken into account, if
available. If no such transactions can be identified, an appropriate valuation
model is used.
For assets, an assessment is made at each reporting date as to whether there is PPSAS 26.99
any indication that previously recognized impairment losses may no longer exist
or may have decreased. If such indication exists, PSU estimates the asset’s or
cash-generating unit’s recoverable amount.
A previously recognized impairment loss is reversed only if there has been a PPSAS
change in the assumptions used to determine the asset’s recoverable amount 26.103
since the last impairment loss was recognized. The reversal is limited so that the
carrying amount of the asset does not exceed its recoverable amount, nor exceed
the carrying amount that would have been determined, net of depreciation, had
no impairment loss been recognized for the asset in prior years. Such reversal is
recognized in surplus or deficit.
Impairment of non-cash-generating assets
PSU assesses at each reporting date whether there is an indication that a non- PPSAS 21.26
cash-generating asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, it estimates the asset’s recoverable
service amount. An asset’s recoverable service amount is the higher of the non- PPSAS 26.14
cash generating asset’s fair value less costs to sell and its value in use.
Where the carrying amount of an asset exceeds its recoverable service amount,
the asset is considered impaired and is written down to its recoverable service
amount. PSU classifies assets as cash-generating assets when those assets were
held with the primary objective generating a commercial return. Therefore, non- PPSAS 26.14
cash generating assets would be those assets from which PSU does not intend (as
its primary objective) to realize a commercial return.
3.15 Service concession arrangements

32
PSU analyses all aspects of service concession arrangements that it enters into in PPSAS 32.9
determining the appropriate accounting treatment and disclosure requirements. In PPSAS 32.14
particular, where a private party contributes an asset to the arrangement, the
Pangasinan State University recognizes that asset when, and only when, it
controls or regulates the services the operator must provide together with the
asset, to whom it must provide them, and at what price.
In the case of assets other than ’whole-of-life’ assets, it controls, through

ownership, beneficial entitlement or otherwise – any significant residual interest
in the asset at the end of the arrangement. Any assets so recognized were
measured at their fair value. To the extent that an asset has been recognized, PSU
also recognizes a corresponding liability, adjusted by a cash consideration paid or
received.
3.16 Employee benefits
The employees of Pangasinan State University are member of the Government

Service Insurance System (GSIS), which provides life and retirement insurance
coverage.
Pangasinan State University recognizes the undiscounted amount of short term

employee benefits, like salaries, wages, bonuses, allowance, etc., as expense
unless capitalized, and as a liability after deducting the amount paid.
PSU recognizes expenses for accumulating compensated absences when these

were paid (commuted or paid as terminal leave benefits). Unused entitlements
that have accumulated at the reporting date were not recognized as expense.
Non-accumulating compensated absences, like special leave privileges, were not
recognized.
3.17 Measurement uncertainty
The preparation of consolidated financial statements in conformity with PPSAS,

requires management to make estimates and assumptions that affect the reporting
amounts of assets and liabilities, and disclosure of contingent assets and
liabilities, at the date of the Consolidated financial statements and the reported
amounts of the revenues and expenses during the period. Items requiring the use
of significant estimates include the useful life of capital assets, estimated
employee benefits, rates for amortization, impairment of assets, estimated value
of biological assets, etc.
Estimates were based on the best information available at the time of preparation
of the consolidated financial statements and were reviewed annually to reflect
new information as it becomes available. Measurement uncertainty exists in
these Consolidated financial statements. Actual results could differ from these
estimates.
4. Changes in Accounting Policies
33
Pangasinan State University adopted the following new accounting policies:
4.1 Presentation of Financial Statements, Cash Flow Statements and Property, Plant and
Equipment
On January 1, 2015, Pangasinan State University adopted the PPSASs No. 1, 2 and 17. The new
standard includes the requirement for the use of new financial statements, recognition of
constructive receipt of Tax Remittance Advices and recognition of Biological Assets. This
accounting change had no significant impact on Pangasinan State University’s consolidated
financial statements.
5. Prior Period Adjustments
Pangasinan State University has determined the following adjustments in income and expenses of
prior years.
As a result of the above adjustments, income and expense items of prior years has a cumulative effect
in the beginning accumulated surplus/(deficit) in the prior and current year.
6. Cash and Cash Equivalents
PARTICULARS 2016 2015

Cash and Cash Equivalents 190,017,336.63 136,768,892.69
Cash on Hand 396,617.92 400,042.49
Cash Collecting Officer 127,473.68 131,783.27
Petty Cash 269,144.24 268,259.22
Cash in Bank – Local Currency 189,620,718.71 130,415,847.32

Cash in Bank – Local Currency, Current Account 189,620,718.71 130,415,847.32
Treasury/Agency Cash Accounts - 5,953,002.88

Cash – Modified Disbursements System (MDS), - 5,953,002.88
Regular
34
Cash equivalents are composed of the following:
1. Cash Collecting Officers consists of un-deposited collections as of December 31.
2. Petty cash fund balances net of un-replenished petty cash vouchers as of December 31
3. Cash in Bank Account composed of the following balances per Bank accounts:
Cash In Bank as of December 31, 2016

Campus/ Bank Account No. Fund Description Amount
Asingan
LBP Account # 0112-1092-18 01-101100 Regular Fund 623,113.01
Transfer
Postal Bank Account# 01011- 05-206441 Tuition and Misc 2,582,115.80
0700097
LBP Account # 0112-1155-87 05-206441 Tuition and Misc 752,245.53
LBP Account # 0112-1158-38 05-206441 SHS 19,640.00
LBP Account # 0112-1120-73 07-308603 Grants 153,487.00
LBP Account # 0112-1135-84 05-206441 IGP 402,698.18
Total Asingan 4,533,299.52
Bayambang
LBP Account No. 1342-1024-72 01-101100 Regular Transfer 3,714,795.79
LBP Account No. 1342-1024-80 05-206441 Tuition and Misc 22,181,626.64
LBP Account No. 1342-1049-20 05-206441 SHS 20,000.00
LBP Account No. 1342-1039-32 07-308603 Grants 2,376,189.38
LBP Account No. 1342-1041-90 05-206441 IGP 3,219,690.12
35
Total Bayambang 31,512,301.93

Binmaley
LBP Acct# 2422-1001-67 01-101100 Regular Transfer 300,404.97
LBP Acct# 2422-1050-29 01-101100 Payroll Account 10,000.00
LBP Acct# 2422-1043-75 (161) 05-206441 IGP 476,983.08
LBP Acct# 2422-1043-83 (164) 05-206441 Tuition and Misc 3,463,877.49
LBP Acct# 2422-1030-93 (184) 07-308603 Grants 2,161,003.45
Total Binmaley 6,412,268.99
Infanta
LBP Acct# 1272-1011-71 01-101100 Regular Transfer 71,715.75
LBP Acct# 1272-1043-83 05-206441 IGP 435,198.92
LBP Acct# 1272-1034-50 05-206441 Tuition and Misc 163,732.20
LBP Acct# 1272-1053-55 07-308603 Grants 254,364.53
Total Infanta 925,011.40
San Carlos
LBP Account # 1342-1006-58 01-101100 Regular Transfer 2,425,146.01
LBP Account # 1342-1034-28 05-206441 Tuition and Misc 19,721,136.58
LBP Account # 1342-1006-66 05-206441 IGP 3,580,274.87
Total San Carlos 26,241,920.17
Sta. Maria
LBP Acct. # 0112-1088-74 (101) 01-101100 Regular Transfer 1,231,352.01
LBP Acct. # 0112-1114-41 (164) 05-206441 Tuition and Misc 1,129,720.92
LBP Acct. # 0112-1143-78 (161) 05-206441 IGP 1,373,243.44
LBP Acct. # 0112-1138-19 (161) 05-206441 Post Harvest 3,315,850.69
LBP Acct. # 0112-1143-94 (184) 07-308603 Grants 762,851.15
Total Sta. Maria 7,813,018.21
Urdaneta
LBP Account # 0112-1087-93 01-101100 Regular Transfer 1,153,436.84
LBP Account # 0112-1110-77 05-206441 Tuition and Misc 11,327,097.72
LBP Account # 0112-1159-86 05-206441 SHS 19,640.00
LBP Account # 0112-1138-43 05-206441 IGP 1,770,637.66
Total Urdaneta 14,646,939.20
Main/Lingayen/Alaminos
LBP Account No. 2422-1050-02 05-206441 Payroll Account 10,000.00
LBP Account No. 2422-1042-60 05-206441 Tuition and Misc 3,028,253.13
LBP Account No. 2422-1047-40 05-206441 University fund 30,996,028.94
LBP Account No. 2422-1041-20 05-206441 Evening Class 7,733,421.55
program
LBP Account No. 0112-1093-66 05-206441 Graduate School 11,238,576.59
LBP Account No. 2422-1052-23 05-206441 SHS 20,000.00
36
LBP Account No. 2422-1040-22 05-206441 Alaminos 12,529,670.09

LBP Account No. 2422-1034-33 05-206441 OUS 8,283,079.46
LBP Account No. 2422-1035-22 05-206441 IGP 15,437,320.95
Total Main 97,535,959.29
GRAND TOTAL 189,620,718.71
7. Receivables
7.1 Loans and Receivables
Accounts Receivables represents uncollected tuition fees from students as of December 31, 2016
except for Bayambang which includes collectible rentals from lessees of P 248,002.69 due over
3 years and IGP receivables of P 36,428.22 in Sta. Maria which is due more than 3 years,
P85,632.58 in Infanta which is due currently and P 9,120 in Binmaley which is due more than
1 year.
7.2 Aging/ Analysis of Receivables
As at December 31, 2016
A new established automated enrolment and collection system was already installed in PSU
Lingayen and in other campuses. The new system now provides updated list of receivables from
uncollected tuition fees and other miscellaneous fees.
7.3 Intra-Agency Receivables
37
The amount reported as Due from Other funds was reported by PSU San Carlos amounting to
P281,280.00 and PSU Sta. Maria amounting to P 642,794.96 which both pertains to errors in fund
deposits.
7.4 Other Receivables
7.4.1 Receivables- Disallowances is composed of the following:
Campus Amount
Bayambang 60,910.60
Infanta 7,482.91
Sta. Maria 260,258.13
Urdaneta 231,214.93
Total 559,866.57
7.4.2 Due from officers and employees are various overpayments and claims from employees
as follows:
Due from Officers and Employees

Campus Amount Details
Asingan 14,906.79 Represents the undeclared absences of Wendy Flordeliz
Valenton not deducted from her last pay.
Bayamban 1,443,985.62 The amount of Php1,441,985.62 includes the cash
g shortage of Mrs. Calulut in 1981 amounting to
Php761,510.70 originally recorded to Other Receivables;
accountabilities of dismissed employees due to
falsification of official documents Martina Datuin
(Php536,519.00) and Sheryl L. Garcia (Php123,732.00)
and it represents error in deposit and error in the issuance
of check that should be charged against other fund. The
Php2,000.00 increase from previous year was due to bank
charge to be paid/refunded by the cashier.
Binmaley 55,707.70 Claims from employees on IGP-related activities
Infanta 17,765.03 Claims from employees on IGP-related activities
38
Due from Officers and Employees

Campus Amount Details
San Carlos 2,352.00 Overpayment of salaries
Sta. Maria 162.97 Refunds from cash advances
Urdaneta 7,135.10 Refund of cash advances
Main 66,494.37 Overpayment of salaries amounting to Php4,123.36 and
over remittance to GSIS and PHILHEALTH amounting to
Php62,371.01 on salaries of Alaminos Contractuals
Total 1,608,509.58
7.4.3 Other Receivables is composed of the following:
8. Inventories
39
Inventories consist of various inventory balances of Office supplies, Accountable Forms,

Medical, Dental and Laboratory Supplies, Agricultural Supplies, Textbook and Instructional
Materials, Other Supplies, Spare Parts, Construction Materials, Livestock and Other
Agricultural, Fishery and Forestry Products purchased and on Hand.
Inventories are carried at a carrying amount of P 18,249,692.63 held for consumption.
9. Property, Plant and Equipment
40
Adjustments and reclassifications amounting various items of PPE due to the conducted
reconciliation with the University property custodian and recognition of physical count made by the
supply office.
10. Biological Assets
Biological assets are recognized at cost. No adjustments on valuations were made as Carrying
Amount based on Physical change or price change.
11. Other Assets
11.1 Current and Non-Current Other Assets
The account other assets include the amount of P 3,750,000.00 previously recorded as
long term investment but was reclassified as other assets in compliance with conversion
41
of accounts to reflect new chart of accounts. The item consists of Funds transferred to
PSU Post harvest and Processing Center and was already utilized by Post Harvest but
was still maintained in the books as receivables. Amount is due for write off waiting for
bank confirmation as to existence of account.
12. Financial Liabilities
12.1 Payables
12.1.1 Accounts Payables represents unpaid obligations from all funds due to year end cut off on
disbursement and obligations not funded from NCA. It also includes adjustments on
unreleased checks as of December 31, 2016.
12.1.2 Due to officers and employees are un-liquidated payroll advances as of December 31,
2016.
13. Inter-Agency and Intra-Agency Payables
13.1 Due to BIR are taxes withheld as of December 31, 2016 which are due for remittances in
January and February 2016.
13.2 Due to GSIS represents obligations for building insurance and the other balances are GSIS
remittances which are due for remittance in January.
13.3 Balances in the Due to Pag-ibig and Due to Philhealth are remittances from un-liquidated
payroll which are due for remittance in January.
13.4 Due to NGAs are unliquidated grants with various agencies like CHED, DAR, DENR, DOST
and other National Government agencies.
42
2016 2015
Intra-Agency Payables 924,074.96 78,695.36
Due to Central Office - 40,224.36
Due to Operating Units - 38,471.00
Due to other funds 924,074.96 -
13.5 Due to other funds are deposits made to accounts which are due for deposits to other accounts.
14. Trust Liabilities
Balances in the trust liability accounts represents collections made that are set aside for specific
purposes.
15. Deferred Credits/Unearned Income
16. Other Payables
Other Payables claims form other agencies or entities not classified as financial liabilities pertains to
various collections due for other agencies and special purposes like Alaminos Municipal
Government share in PSU Alaminos tuition fees per Memorandum of Agreement and liabilities to
Cooperatives and other associations.
17. Service and Business Income
43
18. Personnel Services
18.1 Salaries and Wages
18.2 Other Compensation
44
18.3 Employees Future Benefits
Pangasinan State University and its employees contribute to the Government Service Insurance
System in accordance with the RA 8291 known as Government Service Insurance System Act
of 1997. The Government Service Insurance System (GSIS) administers the plan, including
payment of pension benefits to employees to whom the act applies.
18.4 Personnel Benefit Contributions
18.5 Other Personnel Benefits
19. Maintenance and Other Operating Expenses
19.1 Traveling Expenses
19.2 Training and Scholarship Expenses
19.3 Supplies and Materials Expenses
45
19.4 Utility Expenses
19.5 Communication Expenses
19.6 Awards/Rewards and Prizes
19.7 Confidential, Intelligence and Extraordinary Expenses
19.8 Professional Services
46
19.9 General Services
Particulars 2016 2015

General Services 19,688,496.5 17,428,366.11
5
Janitorial Services 14,035.95 91,701.56
Security Services 4,666,560.00 4,679,806.00
Other General Services 15,007,900.6 12,656,858.55
0
19.10 Repairs and Maintenance
19.11 Taxes, Insurance Premiums and Other Fees
19.12 Labor and Wages
47
19.13 Other Maintenance and Operating Expenses
20. Non-Cash Expenses
20.1. Depreciation
20.2. Impairment Loss
48
21. Net Financial Assistance/Subsidy
Financial Assistance/Subsidy from NGAs, LGUs, GOCCs
49

Notes To Financial Statements Reference

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Pangasinan State University

Notes to Financial Statements Reference

Pangasinan State University PPSAS 1

1. General Information/Agency Profile

The Consolidated Financial Statements of Pangasinan State University were

Pangasinan State University (PSU) is a public non-sectarian, non-profit institution of

PSU’s mandate is to serve as an instrument towards the rapid development of the

PSU’s vision is to become an ASEAN Premier State University in 2020.

PSU’s mission: The Pangasinan State University, through instruction, research,

As PSU started its operation in 1979, it operates two colleges of Agriculture

1. Bayambang Campus which is among the constituent campus of PSU

Notes to Financial Statements Reference

In addition, Pangasinan State University has two academic programs

In 2016, PSU’s implementation of Quality Management System provided

The Pangasinan State University shall be recognized as an ASEAN

We commit our expertise and resources to produce professionals who meet

We shall continuously improve our operations in response to the changing

Notes to Financial Statements Reference

3. Summary of Significant Accounting Policies

3.1 Basis of accounting

The Consolidated financial statements are prepared on an accrual basis in PPSAS 1, 6

The Consolidated financial statements reflect the assets, liabilities, revenues,

b. Interest in joint venture

c. Investment in government business enterprises

PSU do not have any acquisitions of business enterprises either by merger or

d. Trusts under administration

No trusts administered by any entity are held by Pangasinan State University.

3.3 Financial instruments

Initial recognition and measurement

Notes to Financial Statements Reference

Purchases or sales of financial assets that require delivery of assets within a

At present, the Pangasinan State University has no financial assets either

Initial recognition and measurement

3.4 Cash and cash equivalents

Notes to Financial Statements Reference

3.6 Investment Property

Investment property acquired through a non-exchange transaction is measured at PPSAS 16.27

3.7 Property, Plant and Equipment

The characteristics of PPE are as follows: PPSAS 17.14

Notes to Financial Statements Reference

 are expected to be used during more than one reporting period.

An item of PPE is recognized as an asset if:

 It is probable that future economic benefits or service potential

 The cost or fair value of the item can be measured reliably.

Cost includes the following: PPSAS 17.30

 Its purchase price, including import duties and non-refundable purchase

 expenditure that is directly attributable to the acquisition of the items;

Measurement After Recognition

Notes to Financial Statements Reference

Initial Recognition of Depreciation

For simplicity and to avoid proportionate computation, the depreciation is for

Estimated Useful Life

Notes to Financial Statements Reference

3.8 Intangible Assets

Recognition and Measurement

Subsequent Expenditure on an Acquired In-process Research and

Subsequent expenditure on an in-process research or development project PPSAS 31.41

 Recognized as an expense when incurred if it is research expenditure;

 Added to the carrying amount of the acquired in-process research or

Intangible Assets Acquired through Non-Exchange Transactions

Internally Generated Intangible Assets

Notes to Financial Statements Reference