CORDILLERA KIDNEY SPECIALIST INC.

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2016 & 2015

1. CORPORATE INFORMATION

CORDILLERA KIDNEY SPECIALIST, INC. was duly registered with the Securities and Exchange Commission with
SEC No. CS20099352 dated September 23, 2009. It was organized principally to engage in the business of
Kidney Care and Dialysis Center.

Its registered main office address of the company is located at Ground Floor, Midland Courier Building, Kisad
Road, Baguio City.

The financial statements of the Company for the years ended December 31, 2015 and 2014 were authorized
for issue by the President and Treasurer dated March 31, 2016.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of those 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 are prepared under the historical cost basis and are presented in Philippine Peso
(Peso), which is the Companys functional currency.

The accompanying financial statements have 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, which are prepared for submission to the SEC, is in accordance with
Philippine Financial Reporting Standards (PFRS).

2.3 Accounting Policies Adopted

The following sections that have been published and issued by the International Accounting Boards (IASB) and
adopted by the FRSC which became effective for accounting periods beginning on or before January 01, 2009
were adopted by the Company.
Section 3 - Financial Statement Presentation
Section 4 - Statement of Financial Position
Section 5 - Statement of Comprehensive Income and Income Statement
Section 6 - Statement of Changes in Equity and Statement of
Income and Retained Earning
Section 7 - Statement of Cash Flows
Section 8 - Notes to Financial Statements
Section 10 - Accounting Policies, Estimates and Errors
Section 11 - Basic Financial Instruments
Section 17 - Property and Equipments
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
Section 35 - Transition to the IFRS for SMEs
The effects of these sections on the companys accounting policies and on the amounts disclosed in the
financial statements are summarized as follows:

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 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 specific date.

Section 5. Statement of Comprehensive Income and Income Statement, provide specific requirements on
the presentation, classification and related disclosures of entitys comprehensive income, its financial
performance for the period in one or two financial statements.

Section 6, Statement 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 the cost of inventories is no longer acceptable.

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
addition 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 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 Equipments, prescribes the accounting treatment and released 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, and 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, ensures 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 the 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 (ie. 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.

Section 27. Impairment of Assets, prescribes 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 employee 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.

Section 35. Transition to the IFRS for SMEs, applies to a first-time adopter of the IFRS for SMEs, regardless
of whether its previous accounting framework was full IFRSs or another set of generally accepted accounting
principles (GAAP) such as its national accounting standards, or another framework such as the local income
taxes.

The adoption of the above standards, amendments and interpretations, upon which the Company has opted
to adopt, did not have any significant effect of the Companys financial statements. These, however, require
additional disclosures on the Companys financial statements.

In 2015, it is the opinion of Management that assets and liabilities were recognized at fair value; hence, these
were considered deemed costs.

Financial Assets
Financial Assets include cash, trade and other receivables.

Cash
Cash are stated at face value. Cash also includes cash in banks and 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 accounts.

Cash Equivalents
Cash equivalents, if any, are short-term, highly liquid debt instruments that are readily convertible to known
amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of
change in value.

Accounts Receivables
Receivables are stated at its face value.

Property and Equipment

Property and Equipment are stated at cost, excluding the costs of day-to-day servicing, less accumulated
depreciation and amortization and any impairment in value.
The initial cost of property and equipment comprises its purchase price and any directly attributable costs of
bringing the asset to its working condition and location for its intended use. Expenditures incurred after the
property and equipment have been put into operations in the period the costs are incurred. In situation
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.

Depreciation and amortization are calculated on a straight-line basis over the useful lives of the assets.

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 residual values, useful lives and depreciation and amortization method are reviewed, and adjusted
if appropriate, if there is any indication that there has been indication of significant change since the last
annual reporting date.

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 operation in the year the item is derecognized.

Financial Liabilities
Financial Liabilities include trade and other payables and non-interest bearing borrowings. Financial Liabilities
are recognized when the Company becomes a party to the contractual provisions of the instrument.

Trade and Other Payables

Trade and other payables are liabilities to pay for goods or services that have been received or supplied and
have been invoiced or formally agreed with the supplier. It also pertains to SSS, PHIC and HDMF Payable.
Trade payables are not interest bearing and are stated at their nominal value.

Trade and other payables are measured initially at their nominal values and subsequently recognized at
amortized costs less settlement payments.

Financial Instruments

Date of Recognition
The Company recognizes a financial asset or a financial liability in the balance sheets when it becomes a party
to the contractual provisions of the instrument.

Initial Recognition of Financial Instruments

All financial assets are initially recognized at fair value.

Determination of Fair Value

For all financial instruments not listed in active market, the fair value is determined by using appropriate
valuation techniques. Valuation techniques include net present value techniques, comparison to similar
instruments for which market observable prices exist, options pricing models, and other relevant valuation
models.

Impairment of Financial Assets

The company assesses at each balance sheet date whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired
if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred
after the initial recognition of the asset (an incurred loss event) and that loss event (or events) has an impact
on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably
estimated. Evidence of impairment may include indications that the borrower or a group of borrowers is
experiencing significant financial difficulty, default or delinquency in interest or principal payments, the
probability that they will enter bankruptcy or other financial reorganization and where observable data
indicate that there is measurable decrease in the estimated future cash flows, such as changes in arrears or
economic conditions that correlate with defaults.

Derecognition of Financial Assets and Financial Liabilities

Financial Assets
A financial asset (or, where applicable a part of financial asset or a part of group of similar financial assets) is
derecognized when:
-the rights to receive cash flows from the asset have expired;
-the company retains the right to receive cash flows from the asset, but has assumed an obligation to pay
them in full without material delay to a third party under a pass-through arrangement; or
The Company has transferred its rights to receive cash flows from the asset and either
a) has transferred substantially all the risks and rewards of the asset, or
b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.

Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired.
Where an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability, and the difference in
the respective carrying amounts is recognized in the statement of income.

Offsetting Financial Instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only
if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to
settle on a net basis, or to realize the asset and settle the liability simultaneously. This is not generally the case
with master netting agreements, and the related assets and liabilities are presented gross in the balance sheet.

Impairment of Non-Financial Assets

The company assesses as at reporting date whether there is an indication that an asset may be impaired. If
any such indication exists, or when annual impairment testing for an asset is required, the Company makes an
estimate of the assets recoverable amount. An assets recoverable amount is calculated as the higher of the
assets or cash-generating units fair value less costs to sell and its value in use or its net selling price and is
determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent on those assets or groups of assets. Where the carrying amount of an asset exceeds it
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 are discounted to their present value using a pre-tax
discount rate that reflects current market assessment of the time value of money and the risks specific to the
asset. Impairment losses are recognized in the statements of income in those expense categories consistent
with the function of the impaired asset.

An assessment is made at each reporting date as to whether there is an indication that previously recognized
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable
amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in
the estimates used to determine the assets recoverable amount since the last impairment loss was
recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been determined, net of depreciation
and amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is
recognized in the statements of income unless the asset is carried at re-valued depreciation charge is adjusted
in future periods to allocate the assets revised carrying amount, less any residual value, on a systematic basis
over its remaining useful life.

Share Capital
Share capital is determined using the nominal value of shares that have been issued and fully paid.

The costs of acquiring Companys own shares are shown as a deduction from equity attributable to the
Companys equity holders until the shares are cancelled or reissued. When such share are subsequently sold
or reissued, any consideration received, net of directly attributable incremental transaction costs and the
related income tax effects, and is included in equity attributable to the Companys equity holders.
Accumulated Profits
Accumulated Profits includes all current and prior period results as disclosed in the statement of income.

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.

Income Taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted by the balance sheet date.

Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at
each balance sheet date and adjusted to reflect the current best estimate. When the effect of the time value
of money is material, the amount of a provision is the present value of the expenditures expected to be
required to settle the obligation. Where the Company expects a provision to be reimbursed, the
reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

Contingencies
Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of
an outflow of resources embodying economic benefits is remote. A contingent asset is not recognized in the
financial statements but disclosed when an inflow of economic benefits is probable.

Events After the End of the Reporting Period

Post-year-end events up to the date of the auditors report that provide additional information about the
Companys position at the balance sheet date (adjusting events) are reflected in the financial statements.
Post-year-end events that are not adjusting events are disclosed in the notes to financial statements when
material.

Related Parties
Related party relationships exist 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, 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.

3. Managements Significant Accounting Judgment and Estimate

3.1 Judgments
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 circumstances.

3.2 Estimates
In the application of the Companys accounting policies, management is required to make judgments,
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 assumption are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized 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.

Estimated Useful Lives of Property and Equipment

The company estimates the useful lives of property and equipment based on the period over which the
property and equipment are expected to be available for use. The estimated useful lives of the 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
property and equipment. In addition, the estimation of the useful lives of property and equipment is based on
the collective assessment of industry practice, internal technical evaluation and experience with similar asset.
It is possible, however, that future financial performance could be materially affected by changes in the
estimates brought about by changes in factors mentioned above. The amounts and timing of recorded
expenses for any period would be affected by changes in these factors and circumstances.

A reduction in the estimated useful lives of the property and equipment would increase the recorded expenses
and decrease the noncurrent assets.

Depreciation is computed on a straight-line method over the estimated useful lives of the assets.

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.

4. Cash

This account consists of cash on hand and cash in bank which earns interest on its respective rate.
2015 2014
Cash on Hand/In Bank P 1,916,733 P 2,736,941

5. Property and Equipment

2015
Schedule of Property and Equipment
Kind of Asset Date of Acquisition Cost Estimated Depreciation Accumulated Net Book Value Depreciation
Acquisition Useful Life Depreciation Method
Furniture & Fixtures 2010 Php 145,861.47 10 Php 14,586.14 Php 87,516.84 Php 58,344.63 Straight Line
Reverse Osmosis 2010 49,000.00 10 49,200.00 295,200.00 196,800.00 Straight Line
Generator Set 2010 280,000.00 10 28,000.00 168,000.00 112,000.00 Straight Line
Hemodialysis 2010 614,026.00 20 30,701.30 184,207.80 429,818.20 Straight Line
Doorbell/Air Cooler 2010 6,449.75 3 - 6,449.75 - Straight Line
Fire Extinguisher 2013 4,000.00 1 - 4,000.00 - Straight Line
Rolling Cart/Cork 6,880.13
board/Cellphone/Glu
cometer/Half-stool - 6,880.13 - - -
Divider - 3,000.00 - - 3,000.00 -
Airconditioner 2014 37,999.32 10 3,799.93 7,599.86 30,399.46 Straight Line
AVR Generator 2014 16,500.00 10 1,650.00 3,300.00 13,200.00 Straight Line
Bedsheets 2014 14,160.00 5 2,832.00 5,664.00 8,496.00 Straight Line
Cellphone 2014 3,199.00 5 639.80 1,279.60 1,919.40 Straight Line
Generator 2015 665,000.00 10 66,500.00 66,500.00 598,500.00 Straight Line
Furniture & Fixtures 2015 17,000.00 10 1,700.00 1,700.00 15,300.00 Straight Line
Beddings & Linens 2015 10,000.00 5 2,000.00 2,000.00 8,000.00 Straight Line
Total Php 2,316,075.67 Php 201,609.17 Php 833,417.85 Php 1,482,657.82

Leasehold Improvements Php 1,236,410.00 5 Php 247,282.00 Php 989,128.00 Straight Line

6. Revenue
Revenue is derived from treatment of patients with kidney problems and dialysis services.
Income from various patients - Php 1,603,271.50
Income from Philhealth - 17,660,400.00
Total - Php19,263,671.50
7. Withholding Tax
7.1 Withholding tax expanded (rental-building) payments consists of the following:
2016
Period covered Monthly Rent Withholding Tax Date Remitted Name of Bank
January Php. 112,500.00 Php. 5,625.00 2/09/2016 LBP
February 112,500.00 5,625.00 3/09/2016 LBP
March 112,500.00 5,625.00 4/07/2016 LBP
April 112,500.00 5,625.00 5/10/2016 LBP
May 112,500.00 5,625.00 6/09/2016 LBP
June 112,500.00 5,625.00 7/08/2016 LBP
July 112,500.00 5,625.00 8/08/2016 LBP
August 112,500.00 5,625.00 9/06/2016 LBP
September 112,500.00 5,625.00 10/07/2016 LBP
October 112,500.00 5,625.00 11/10/2016 LBP
November 112,500.00 5,625.00 12/08/2016 LBP
December 112,500.00 5,625.00 1/13/2017 LBP
Total Php 1,350,000 Php. 67,500

7.2 Withholding tax expanded (rental-machineries) payments consists of the following:

2016
Period covered Monthly Rent Withholding Tax Date Remitted Name of Bank
January Php. 603,330.00 Php. 30,166.50 2/09/2016 LBP
February 699,300.00 34,965.00 3/09/2016 LBP
March 651,000.00 32,550.00 4/07/2016 LBP
April 658,350.00 32,917.50 5/10/2016 LBP
May 741,300.00 37,065.00 6/09/2016 LBP
June 623,700.00 31,185.00 7/08/2016 LBP
July 637,350.00 31,867.50 8/08/2016 LBP
August 644,700.00 32,235.00 9/06/2016 LBP
September 712,950.00 35,647.50 10/07/2016 LBP
October 769,650.00 38,482.50 11/10/2016 LBP
November 739,200.00 36,960.00 12/08/2016 LBP
December 711,900.00 35.595.00 1/13/2017 LBP
Total Php 8,192,730.00 Php. 409,636.50

7.3 Withholding tax expanded (purchase of goods) payments consists of the following:
2016
Period covered Monthly Rent Withholding Tax Date Remitted Name of Bank
January Php. 28,104.00 Php. 1,405.20 2/09/2016 LBP
February 20,872.00 1,043.60 3/09/2016 LBP
March 31,816.00 1,590.80 4/07/2016 LBP
April 32,392.00 1,619.60 5/10/2016 LBP
May 33,544.00 1,677.20 6/09/2016 LBP
June 31,240.00 1,562.00 7/08/2016 LBP
July 20,736.00 1,036.80 8/08/2016 LBP
August 16,743.20 837.16 9/06/2016 LBP
September 15,880.00 794.00 10/07/2016 LBP
October 15,880.00 794.00 11/10/2016 LBP
November 71,677.20 3,583.86 12/08/2016 LBP
December 52,278.00 2,613.90 1/13/2017 LBP
Total Php 371,162.40 Php. 18,558.12

7.4 Withholding tax expanded (professional fees) payments consists of the following:
2016
Period covered Monthly Rent Withholding Tax Date Remitted Name of Bank
January Php. 2,316,500.00 Php. 115,825.00 2/09/2016 LBP
February 823,100.00 41,155.00 3/09/2016 LBP
March 850,000.00 42,500.00 4/07/2016 LBP
April 676,500.00 33,825.00 5/10/2016 LBP
May 2,104,400.00 105,220.00 6/09/2016 LBP
June 501,500.00 25,075.00 7/08/2016 LBP
July 1,079,500.00 53,975.00 8/08/2016 LBP
August 1,280,000.00 64,000.00 9/06/2016 LBP
September 1,082,000.00 54,100.00 10/07/2016 LBP
October 1,598,000.00 79,900.00 11/10/2016 LBP
November 1,359,000.00 67,950.00 12/08/2016 LBP
December 1,189,500.00 59,475.00 1/13/2017 LBP
Total Php 14,860,000.00 Php. 743,000.00

8. Capital Stock

8.1 Capital Structure

The company has an authorized capitalization of P 2,000,000 divided into 20,000 common shares with par
value of P100.00 per share. The total paid-up capital is in the amount 125,000 as of December 2015.

8.2 Capital Management

The capital of the company comprises only of the entitys own equity instruments that are fully paid, issued,
and outstanding. The primary objectives of the Companys capital management are to ensure that the
Company complies with externally imposed capital requirements and that the Company maintains strong
credit ratings and healthy capital ratios in order to support its business and to maximize shareholders value.

The Company manages its capital structure and makes adjustments to it in the light of changes in economic
conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividend payment to shareholders, return capital to shareholders or issue
capital securities. No changes were made in the objectives, policies and processes from the previous years.

9. Taxes and Licenses

2015 2014
Business Permit Fees P 49,678.34 P 49,059.68
Residence Certificate 2,985.00 2,759.18
Barangay Clearance 400.00 400.00
Taxes 249,408.43 -
BIR Registration 500.00 500.00
Fiscal Caliform Test 6,200.00 -
Philhealth Accreditation Fee 5,000.00 -
Documentary Stamps 2,500.00 -
Chemical Analysis Fee 9,150.00 -
Air and Hazardous Waste Registry 4,725.00 -
Fee
EMB Fees 15,000.00 -
Permit to Construct at DOH 1,400.00 -
Total P 346,946.77 P 52,718.86

10. Employee Benefits

10.1 Short-term Benefits

The company recognizes a liability net of amounts already paid an expense for services rendered by the
employees during the accounting period. Short term benefits given by the company to its employees include
compensation, social security, philhealth and home development mutual fund contributions, short term
compensates absences and other non-monetary benefits.

10.2 Retirement Benefits

Employees, upon reaching the age of sixty (60) years or more, but not beyond sixty five (65) years and who
have served at least five (5) years in the Company, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year. The term one-half (1/2) month salary shall mean fifteen (15) days plus
one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.
11. Provision for Income Tax

Under Philippine tax laws, the company is subject to percentage tax and other taxes as well as income taxes.
Percentage and other taxes paid consist principally of gross receipts tax (GRT) and documentary stamp tax.
Payments for these taxes are charged to Taxes and Licenses account.

Income Taxes include the corporate income tax, discussed below, and final tax paid which represents the final
withholding tax on gross interest income from government securities and other deposit substitutes. These
income taxes, as well as the deferred tax benefits and provisions, are presented as provision for income tax in
the statement of income.

Under current tax regulations, the applicable income tax rate is 30%. Interest allowed as a deductible expense
is reduced by an amount equivalent to 33% of interest income subjected to final tax. Also, entertainment,
amusement and recreation (EAR) expense is limited to 1% of net revenues, as defined, for sellers of services
beginning September 01, 2002. The current regulations also provide for MCIT of 2% modified gross income
and allow a three-year NOLCO. Any excess of the MCIT over the regular income tax is deferred and can be
used as a tax credit against future income tax liability while NOLCO can be applied against taxable income,
both in the next three years from the year of occurrence.

The companys liability for income tax is based on existing tax laws and BIR Regulations. However, income tax
expense as shown on the statement of operation is determined under the provisions of PAS 12 Income Taxes.
Under PAS 12, income tax expense is the sum of current tax expenses computed under tax laws and deferred
tax expense determined through the use of balance sheet liability method. Deferred tax expense is the sum of
the changes in deferred tax asset and deferred tax liability. The balance sheet liability method focuses on
temporary differences. Temporary differences between the tax base of an asset or liability and its carrying
amount in the statement of financial position. The tax base of an asset or liability is the amount attributed to
that asset or liability for tax purposes.

Taxable Income (PAS 12 Income Taxes and Regular Corporate Income Tax)
Regular Corporate Income Tax (RCIT)
2015 2014 ___
Total Income P 19,263,671 P 14,347,926
Less: Ordinary Allowable Deduction 17,188,711 13,477,519
Taxable Income P 2,074,960 P 870,407
RCIT rate 30% 30%_
Current Tax Expense P 622,488 P 261,122

12. Information Required under Revenue No. 15-2010Provision for Income Tax

In November 2010, the BIR issued Revenue Regulations 15-2010 which requires all companies to disclose all
taxes and license fees paid or accrued during the taxable year.

13. Effects of the Adoption of Amendments on PAS 1, Presentation of Financial Statements (revised 2007)

The revised standard requires that the statement of changes in equity includes only transactions with owners
and all non-owners changes are presented in equity as single line with details included in a separate
statement. Owners are defined as holders of instruments classified as equity.

In addition, the amendment to PAS 1 provides for the introduction of a new statement of comprehensive
income that combines all items of income and expenses recognized in the statements of income together with
other comprehensive income. The revisions specify what is included in other comprehensive income, such
as gains and losses on available-for-sale assets, actuarial gains and losses and changes in the asset revaluation
reserve. Entities can choose to present all items in one statement of comprehensive income. Cordillera
Kidney Specialist Inc. chooses to present two statements. The company will assess the impact of the standard
on its current manner of reporting all items of income and expenses.

The Company has adopted the above amendments of the standard. However, the Company has no other
comprehensive income for the years ended December 31, 2015 and 2014.