SH CO.

PARTNERS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2018

NOTE 1 COMPANY INFORMATION

SH CO. PARTNERS is a general partnership formed subject to the provisions of

existing laws of the Republic of the Philippines under SEC reg. no. PG200512525 to conduct,
operate, maintain or otherwise operate a study hub on January 01, 2018. It was registered with
the Securities Exchanged Commission on June 02, 2017. It was registered with the Bureau of
Internal Revenue on June 15, 2017.

The registered address of the company is Aria St., Manila Times Village,
Pamplona Las Pias City.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial

statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.

2.1 BASIS OF PREPARATION

The financial statements of the company have been prepared based on historical
measurement and are presented rounded off in Philippine pesos, which is the companys
functional and presentation currency. All values represent absolute amounts except when
otherwise indicated.

The accompanying financial statements have been prepared on a going concern basis,
which contemplate the realization of assets and settlement of liabilities in the normal course
of business.

2.2 STATEMENT OF COMPLIANCE

The accompanying financial statements have been prepared in accordance with

Philippine Financial Reporting Standards for Small and Medium-Sized Entities (PFRS for
SMEs).

2.3 ACCOUNTING POLICIES ADOPTED

The following accounting standards that have been published and issued by the
International Accounting Standards Board (IASB) and adopted by the FRSC which become
effective for accounting periods beginning on as after January 1, 2010 were adopted by the
Company:

Section 1 - Small and Medium Sized Entities

Section 2 - Concepts and Pervasive Principles
Section 3 - Financial Statement Presentations
Section 4 - Statement of Financial Position
Section 5 - Statement of Comprehensive

1
 Income and Income Statement
Section 6 - Statement of Changes in Equity and
Statement of Income and Retained
Earnings
Section 7 - Statement of Cash Flows
Section 8 - Notes to Financial Statements
Section 10 - Accounting Policies, Estimates &
Errors
Section 11 - Basic Financial Instruments
Section 17 - Property and Equipment
Section 20 - Leases
Section 21 - Provisions and Contingencies
Section 22 - Liabilities and Equity
Section 23 - Revenue
Section 27 - Impairment of Assets
Section 28 - Employee Benefits
Section 29 - Income Tax
Section 32 - Events After the End of the
Reporting Period
Section 33 - Related Party Disclosures

The effects of these new standard, amendments and interpretation on the companys
accounting policies and in the amounts disclosed in the financial statements are summarized
as follows:

Section 1, Small and Medium Sized Entities, IFRS for SMEs is intended for
Non Publicly Accountable Entities that publish general purpose financial statements for
external users.

Section 2, Concepts and Pervasive Principles, describes the objective of financial

statements of small and medium entities (SMEs) and the qualities that make the information
in the financial statements of SMEs useful. It also sets out the concepts and basic principles
underlying the financial statements of SMEs.

Section 3, Financial Statement Presentation, provides a framework within which an

entity assesses how to present fairly the effects of transactions and other events. It requires
that an entity shall make an explicit and unreserved statement of compliance with IFRS for
SMEs in the notes, complete sets of financial statements must be presented at least annually
and at least one year comparative statements and note data, and items should be consistently
presented and classified from one period to the next.

Section 4, Statement of Financial Position, provides specific requirements on the

presentation, classification and related disclosures of entitys assets, liabilities and equity as of
a specific date.

Section 5, Statement of Comprehensive Income and Income Statement, provides

specific requirements on the presentation, classification and related disclosures of entitys
total comprehensive income, its financial performance for the period in one or two financial
statements.

Section 6, Statements of Changes in Equity and Statement of Income and Retained

Earnings, sets out requirements for presenting the changes in an entitys equity for a period,
either in a statement of changes in equity or, if specified conditions are met and an entity
chooses, in a statement of income and retained earnings.

2
 Section 7, Statement of Cash Flows, requires the provision of information about
the historical changes in cash and cash equivalents of an entity by means of a cash flow
statement which classifies cash flows during the period from operating, investing and
financing activities.

Section 8, Notes to Financial Statements, sets out the principles underlying

information that is to be presented in the notes to the financial statements and how to present
it. Notes contain information in additional to that presented in the statement of financial
position, statement of comprehensive income, income statement (if presented), combined
statement of income and retained earnings ( if presented ), statement of changes in equity ,
and statement of cash flows. Notes to provide narrative descriptions or desegregations of
items presented in those statements and information about items that do not qualify for
recognition in those statements. In addition to the requirements of this section, nearly every
other section of this IFRS requires disclosures that are normally presented in the notes.

Section 10, Accounting Policies, Estimates and Errors, eliminates the concept of
fundamental error and the allowed alternative to retrospective application of voluntary
changes in accounting policies and retrospective restatement to correct prior period errors.
The section defines material omissions and misstatements and describes how to apply the
concept of materiality when applying accounting policies and correcting errors.

Section 11, Basic Financial Instruments, applies to basic financial instruments and
is relevant to all entities. An entity shall recognize a financial asset or a financial liability only
when the entity becomes a party to the contractual provisions of the instrument. When a
financial asset or financial liability is recognized initially, an entity shall measure it at the
transaction price unless the arrangement constitutes, in effect, a financing transaction.

Section 17, Property and Equipment, prescribes the accounting treatment and
related disclosures for property and equipment, investment property, and non-current assets
held for sale whose fair value cannot be measured reliably without undue cost and effort. It
provides guidance on initial and subsequent recognition as well as measurement after
recognition. It requires depreciation for each significant part of an item of property, plant and
equipment. The standard also provides guidance on the determination of the carrying amount
of the assets, the residual value, depreciation period and derecognition principles to be
observed.

Section 20, Leases, prescribes that lease payments under operating leases shall be
recognized as income/expense on a straight-line basis unless another basis is more
representative of the timing of the benefits obtained by the user of the asset or the payments
are structured to increase in line with expected general inflation.

Section 21, Provisions and Contingencies, ensure that appropriate recognition

criteria and measurement basis are applied to provisions, contingent liabilities and contingent
assets and that sufficient information is disclosed in the notes to financial statements to enable
users to understand their nature, timing and amount.

Section 22, Liabilities and Equity, establishes principles for classifying financial
instruments as either liabilities or equity and addresses accounting for equity instruments
issued to individuals or other parties acting in their capacity as investors in equity instruments
(i.e. in their capacity as owners).

Section 23, Revenue, provides additional guidelines as to the timely recognition of

revenue, which is measured at the fair value of the consideration received or receivable.

3
 Section 27, Impairment of Assets , prescribe the procedures that an entity applies to
ensure that its assets are carried at no more than their recoverable amount if its carrying
amount exceeds the amount to be recovered through use or sale of the asset. If this is the case,
the asset is described to be impaired and the standard requires the entity to recognize an
impairment loss. The section also specifies when an entity should reverse an impairment loss
previously recognized.

Section 28, Employee Benefits, applies to all employee benefits offered by an

employer to employees and their dependents and beneficiaries. This section applies to
employee benefits under: (i) formal plans and agreements between an enterprise and its
employees, (ii) national, local, industry or multi-employer plans; and informal practices
giving rise to a constructive obligation. This section also identifies the following categories of
employee benefits such as short-term employee benefits, post employment benefits, other
long-term employee benefits and termination benefits.

Section 29, Income Tax, covers accounting for income tax. It requires an entity to
recognize the current and future tax consequences of transactions and other events that have
been recognized in the financial statements.

Section 32, Events After the End of the Reporting Period, defines events after the
end of the reporting period and sets out principles for recognizing, measuring and disclosing
such events.

Section 33, Related Party Disclosures, provides additional guidance and clarity in
the scope, definitions and the disclosures for related parties. It requires disclosure of the
compensation of key management personnel.

Adoption of the above standards, amendments and interpretations, upon which the
company has opted to adopt, did not have any significant effect on the companys financial
statements. These, however, requires additional disclosures on the companys financial
statements.

CASH

Cash are stated at face value. Cash includes petty cash fund which is being utilized to
fund expenses on a day to day transaction of the company and cash in banks which consists of
current and savings account.

OTHER CURRENT ASSETS

Other current assets are carried at the transaction cost and include prepaid supplies.

4
PROPERTY AND EQUIPMENT

Property and equipment are initially measured at cost and subsequently measured at
cost less any accumulated depreciation and any accumulated impairment losses.

The initial cost of property and equipment comprises its purchase price and any cost
directly attributable to bringing the asset to its working location and condition necessary for it
to be capable of operating in the manner intended by the management.

A part of some items of property and equipment may require replacement at regular
interval. The entity decide not to add to the carrying amount of an item of property and
equipment, the cost of replacing part of such an item when that cost as incurred if the
replacement part is expected not to provide incremental future benefits to the entity.

Expenditures incurred after the property and equipment have been put into
operations, such as repairs and maintenance and overhaul costs, are normally charged to
operations in the period the costs are incurred. In situations where it can be clearly
demonstrated that the expenditures have resulted in an increase in the future economic
benefits expected to be obtained from the use of an item of property and equipment beyond its
originally assessed standard of performance, the expenditures are capitalized as additional
costs of property and equipment. Cost also includes any asset retirement obligation and
interest on borrowed funds used. When assets are sold or retired, their costs and accumulated
depreciation, amortization and impairment losses, if any, are eliminated from the accounts and
any gain or loss resulting from their disposal is included in the statement of operations of such
period.

The useful life of each of the property and equipment is estimated based on the period
over which the asset is expected to be available for use. Such estimation is based on a
collective assessment of industry practice and experience with similar assets.

The assets' useful lives and depreciation and amortization method are reviewed, and
adjusted if appropriate, at each financial year-end.

An item of property and equipment is derecognized upon disposal or when no future

economic benefits are expected to arise from the continued use of the asset. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included in the statement of operations in the
year the item is derecognized.

OTHER CURRENT LIABILITIES

Other current liabilities are carried at transaction cost which includes statutory
liabilities.

5
PARTNERS EQUITY

Partners Equity includes initial investment of the partner and additional investments
made. Profit and Loss sharing is based on capital contribution on the results of operation
which are taxable per individual partners.

REVENUE AND COST RECOGNITION

Revenue is recognized when it is probable that the economic benefits associated with
the transaction will flow to the Company and the amount of the revenue can be measured
reliably.

Revenue is measured at the fair value of the consideration received or receivable and
represents amounts receivable for goods or services provided in the normal course of
business.
Service Income revenue is recognized when the corresponding services
are rendered to the customers. The related cost of service are recognized
when incurred.
Sales revenue is recognized when the corresponding sales has been made
to customers. The related cost of goods are recognized when sales occurred.

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

EMPLOYEE BENEFITS

Employee benefits represents; (a) short-term employee benefits, which are employee
benefits (other than termination benefits) that are wholly due within twelve months after the
end of the period in which the employees render the related service, (b) post-employment
benefits, which are employee benefits (other than termination benefits) that are payable after
the completion of employment, (c) other long-term employee benefits, which are employee
benefits (other than post-employment benefits and termination benefits) that are not wholly
due within twelve months after the end of the period in which the employees render the
related service and (d) termination benefits, which are employee benefits payable as a result
of either an entitys decision to terminate an employees employment before the normal
retirement date, or an employees decision to accept voluntary redundancy in exchange for
those benefits or a retirement payment in accordance to law or registered retirement plan
agreement.

Short-term employee benefits include items such as:

(a) wages, salaries and social security contributions;

(b) short-term compensated absences (such as paid annual leave and paid sick leave)
when the absences are expected to occur within twelve months after the end of the period in
which the employees render the related employee service.
(c) bonuses and thirteenth month pay payable within twelve months after the end of
the period in which the employees render the related service;

Short-term employee benefits are measured at the undiscounted amount expected to

be paid in exchange for that service.

6
 The company operates within the Philippines and employed about Sixteen (15)
employees as of December 31, 2022 and 2018, respectively.

Post-employment benefits include items such as:

(a) Retirement benefits, such as pensions or retirement benefits required by law and
(b) Other post-employment benefits, such as post-employment life insurance and
post-employment medical care.

The Company has no established formal retirement plan, however the company pay
its retirement benefit under Republic Act 7641 The New Retirement Law of the Philippines
which mandates the company to pay the employee a retirement benefit upon reaching the age
of sixty years or more, but not beyond sixty-five years and who have rendered at least five
years in the company. Retirement benefit is equivalent to at least one-half month for every
year of service, a fraction of at least six (6) months being considered as one whole year.
Furthermore, "one-half month salary" was defined to include: (a) Fifteen (15) days salary of
the employee based on his latest salary rate; (b) The cash equivalent of five (5) days of
service incentive leave; (c) One-twelfth (1/12) of the 13th month pay due the employee, and
(d) All other benefits that the employer and employee may agree upon that should be included
in the computation of the employee's retirement pay. The company has no other post-
employment benefits other than retirement benefit.

Other long-term employee benefits, if any include, for example:

(a) Long-term compensated absences such as long-service or sabbatical leave.
(b) Long-service benefits
(c) Long-term disability benefits
(d) Profit-sharing and bonuses payable twelve months or more than after the end of
the period in which the employees render the related service.
(e) Deferred compensation paid twelve months or more after the end of the period in
which it is earned.
Other long-term employee benefits, if any are measured at the net total of the present
value of the benefit obligation at the reporting date minus the fair value at the reporting date
of plan assets (if any) out of which the obligations are to be settled directly.

Termination benefits include: by legislation, by contractual or other agreements with

employees or their representatives or by a constructive obligation based on business practice,
custom or a desire to act equitably to make payments (or provide other benefits) to employees
when it terminates their employment. Termination benefits are measured at the best estimate
of the expenditure that would be required to settle the obligation at the reporting date. In case
of an offer made to encourage voluntary redundancy, the measurement of the termination
benefits shall be based on the number of employees expected to accept the offer. When
termination benefits are due more than twelve months after the end of the reporting period,
they shall be measured at their discounted present value.

INCOME TAX

As a general partnership, the company is subject to regular income tax of 30% of

their net income from operation. The net profit is distributed to the partners according to the
ratio specified in the articles of partnership. Final income tax will be paid by the individual
partner.

7
VALUE-ADDED TAX

Revenues, expenses and assets are recognized net of the amount of value-added tax
except:

Where the value-added tax incurred on a purchase of assets or services is not

recoverable from the taxation authority, in which case the value-added tax is recognized as
part of the costs of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables that are stated with the amount of value-added tax included.

The net amount of value-added tax recoverable from, or payable to, the taxation
authority is included as part of other current assets or payables in the balance sheets.

PROVISIONS AND CONTINGENCIES

Initial Recognition

The company recognized a provision when the company has an obligation at the
reporting date as a result of a past event and it is probable that the company will be required
to transfer economic benefits in settlement and lastly the amount of ob ligations can be
estimated reliably.

The company measured provisions at the best estimate at the amount required to
settle the obligations at the reporting date. The best estimate is the amount an entity would
rationally pay to settle the obligations at the end of the reporting period or to transfer it to the
third party at that time.

Subsequent Measurement

The company shall charge against a provisions only those expenditures for which the
provisions was originally recognized and review provisions at each reporting date and adjust
them to reflect the current best estimate of the amount that would be required to settle the
obligations at that reporting date. Any adjustments to the amounts previously recognized shall
be recognized at profit or loss unless the provisions are originally recognized as part of the
cost of an asset. When a provision is measured at the present value of the amount expected to
be required to settle the obligations, the unwinding of the discount shall be recognize as
finance cost in profit or loss in the period it arises.

EVENTS AFTER THE END OF THE REPORTING PERIOD

The company adjust the amounts recognized in its financial statements including its
related disclosures to reflect adjusting events after the end of the reporting period. Hence, the
company shall not adjust the amounts recognized in its financial statement to reflect non-
adjusting events after the end of the reporting period.

RELATED PARTIES

Related party relationships exists when one party has the ability to control, directly or
indirectly through one or more intermediaries, the other party or exercise significant influence
over the other party in making financial and operating decisions. This includes: (1) individual
owning, directly or indirectly through one or more intermediaries, control, or are controlled
by, or under common control with, the Company; (2) associates; and (3) individuals owning,

8
directly or indirectly, an interest in the voting power of the Company that gives them
significant influence over the Company and close members of the family of any such
individual.

The key management personnel of the Company and post-employment benefit plans
for the benefit of Companys employees are also considered to be related parties.

NOTE 3 - MANAGEMENTS SIGNIFICANT ACCOUNTING JUDGEMENT AND

ESTIMATES

3.1 JUDGEMENTS

The preparation of the Companys financial statements in conformity with PFRS

for SMEs requires management to make estimates and assumptions that affect the amounts
reported in the Companys financial statements and accompanying notes. The estimates and
assumptions used in the Companys financial statements are based upon managements
evaluation of relevant facts and circumstances as of the date of the Companys financial
statements. Actual results could differ from such estimates, judgments and estimates are
continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.

3.2 ESTIMATES

In the application of the Companys accounting policies, management is required to

make judgements, estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to accounting estimates are recognised in the period in which the estimate is
revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.

The Companys financial statements prepared in accordance with PFRS for SMEs
require management to make judgments and estimates that affect amounts reported in the
financial statements and related notes. Judgments and estimates are continually evaluated and
are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. Actual results may ultimately
differ from these estimates.

Key Sources of Estimation Uncertainty

The following are the key assumptions concerning the future, and other key sources
of estimation uncertainty at the end of the reporting period, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year.

a) Useful Lives of Property and Equipment

The Company estimates the useful lives of property and equipment based on the
period over which the assets are expected to be available for use. The estimated

9
 useful lives of property and equipment are reviewed periodically and are updated if
expectations differ from previous estimates due to physical wear and tear, technical or
commercial obsolescence and legal or other limits on the use of the assets.

Based on managements assessment as of December 31, 2022 & 2018, there is no

change in estimated useful lives of property and equipment during the year. Actual
results however may vary due to changes in estimates brought about by changes in
factors mentioned above.

The estimated useful lives of property and equipment are reviewed, and adjusted if
appropriate, at the end of each reporting period.

b) Impairment of Non-financial assets

The Company assesses the value of property, plant and equipment which require the
determination of future cash flows expected to be generated from the continued use
and ultimate disposition of such assets, and require the Company to make estimates
and assumptions that can materially affect the financial statements. Future events
could cause the Company to conclude that property and equipment and other long-
lived assets are impaired. Any resulting impairment loss could have a material
adverse impact on the Company's financial condition and results of operations.

The preparation of the estimated future cash flows involves significant judgment and
estimations. While the Company believes that its assumptions are appropriate and
reasonable, significant changes in these assumptions may materially affect the
Companys assessment of recoverable values and may lead to future additional
impairment charges.

c) Revenue recognition

The Companys revenue recognition policies require the use of estimates and
assumptions that may affect the reported amounts of revenues and receivables.
Differences between the amounts initially recognized and actual settlements are taken
up in the accounts upon reconciliation. However, there is no assurance that such use
of estimates may not result to material adjustments in future periods.

NOTE 4 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Initial recognition of financial assets and liabilities

A financial asset or a financial liability is recognized only when the entity becomes a
party to the contractual provisions of the instrument.

A financial asset or financial liability is initially measured as follows:

For services rendered to customers on account, receivable is recognized at the

transaction price which is normally the invoice price.

For goods purchase from a supplier on short-term credit, a payable is recognized at

the transaction price, which is normally the invoice price.

Subsequent Measurement

10
 For services rendered to customer on account, a receivable is recognized at the
undiscounted amount of cash or other consideration expected to received, net of any
impairment or nay uncollectible amount.

For goods purchased from a supplier on short-term credit, a payable is recognized at

the undiscounted amount of cash or other consideration expected to be paid.

Derecognition of a financial asset

An entity shall derecognize a financial asset only when:

(a) the contractual rights to the cash flows from the financial asset expire or are settled, or
(b) the entity transfers to another party substantially all of the risks and rewards of ownership
of the financial asset, or
(c) the entity, despite having retained some significant risks and rewards of ownership, has
transferred control of the asset to another party and the other party has the practical ability to
sell the asset in its entirety to an unrelated third party and is able to exercise that ability
unilaterally and without needing to impose additional restrictions on the transfer.

Derecognition of a financial liability

An entity shall derecognize a financial liability (or a part of a financial liability) only
when it is extinguished, that is when the obligation specified in the contract is discharged, is
cancelled or expires.

A financial liability is derecognized when the obligation under the liability is

discharged, cancelled or expired. Where an existing financial liability is replace by another
from the same lender or substantially different terms or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as an derecognition of the
original liability and the recognition of a new liability and the difference in the respective
carrying amount is recognized in the statement of income.

NOTE 5 CASH

This account is composed of:

NOTE 6 Prepaid Tax Expense

This account is composed of:

NOTE 7 PROPERTY AND EQUIPMENT

11
 This account is composed of:

(See appendix I)

NOTE 8 LAND

This account consists of:

NOTE 9 REVENUE
This account consists of:

12
(See appendix II)

NOTE 10 COST OF SERVICES

This account is composed of:

NOTE 11 COMPENSATION

This account includes:

(See appendix III)

NOTE 12 SUPPLIES EXPENSE

This account is composed of:

(See appendix IV)

NOTE 13 UTILITIES EXPENSE

13
 This account is composed of:

(See appendix V)

NOTE 14 TAXES AND LICENSES

This account includes:

(See appendix VI)

NOTE 15 OTHER EXPENSES

This account is composed of:

14
15