NOTES TO INTERIM FINACIAL STATEMENTS

AS OF &THE PERIOD ENDED NOVEMBER 7, 2018

COMPANY INFORMATION

E.B UDARBE CONSTRUCTION is a domestic company organized and registered under the laws of the
republic of the Philippines through the Bureau of internal revenue (BIR) with Revenue District Office
(RDO) no. 13 with Tax identification no. 914-975-591-000, primarily ARCHITECHTURAL DESIGN, with
principal office address at 6A Sampaguita St. Gabriel Village, Tuguegarao City, Cagayan.

Authorization for issue of the Interim Financial Statements

The accompanying interim financial statements were approved and authorized for issue by the Owner of
the Company and have been approved and authorized for insurance on November 12, 2018.

These financial statements are present in the Philippine peso being the Company’s functional currency.

The preparation of financial statements in conformity with the Philippine Financial reporting Standards
requires the use of certain critical accounting estimates. It also requires management to exercise its
judgment in the process of applying Company’s accounting policies. Areas involving a higher degree of
judgment or complexity, or areas where assumptions and estimations are significant to the financial
statement are disclosed in Note 3.

SUMMARY OF SIGNIFICANT ACCOUTING POLICIES AND IMPACT OF THE NEW REVISED ACCOUNTING
STANDARD

The principal accounting policies applied in the preparation of these financial statement are set forth
below. These policies have been consistently applied to all the years presented unless otherwise stated.

Basis of Preparation

The accompanying financial statement have been presented and prepared in Philippine Peso using the
historical cost basis.

The financial statement of the company have been prepared in accordance with the generally accepted
principles in the Philippines. The Company is a non-publicly accountable entity (NPAE) under the
Philippine Accounting Standards.

The Company applied Section 35 (Transition to the PFRS for SMEs in preparing the Financial Statements

Statements of Compliance
The financial statement of the company have been prepared in accordance with the Philippine Financial
Reporting Standards for Small and Medium-Sized entities (PFRS for SMEs)

The company prepared its financial statement until November 7, 2018 in accordance with the generally
accepted accounting principles in the Philippines applicable to a non-publicly accountable entity (NPAE).
The company qualifies as an NPAE under Philippine Accounting Standards (PAS 101), Financial Reporting
Standards for Non Publicly accountable Entities and as permitted under that standard, prepared its
financial statements on the basis of standards (pas 101). Financial Accounting Standard for NPAE,
Statements of Financial Accounting Standard (SFAS) and Statement of Financial Accounting
Standards/international Accounting Standard (SFAS/IAS), accounting Standards (PAS/IAS).

Significant changes in Accounting Policies and Disclosures

Changes Arising from the Transition of PFRS for SMEs

As stated under Note 2, these are the company’s first financial statements prepared in accordance with
PFRS for SMEs. The company applied this new financial reporting framework in preparing these financial
statements. The company likewise applied the accounting policies set forth below to all the years
presented except those relating to financial position, financial performance and cash flows of the
Company is provided and summarized below.

The company recognized all assets and liabilities whose recognition is required by the PFRS for SMEs
(”standards”), apply the said standards measuring all recognized assets and liabilities. These are
accounting policies that the company uses in its opening statement of financial position. Under these
standards that may differ from those that is used for the same date using its previous financial reporting
framework. The resulting adjustments if any, arise from transaction to those standards which shall be
applied retrospectively. The management believes however, that at the date of transition to these
standards, there are no materiality of significant adjustments recognized.

Changes in Accounting Policies and Disclosures

The Principal Accounting policies applied in the preparation of these financial statements are set for the
below. The accounting policies adopted are consistent with those of the previous financial year except
for the following new and optional accounting policies, disclose and treatment recognition and
measurement disclosures. Comparative presentation and disclosures, if necessary is required by the
standards. Adoption of these standards has no effect on Company’s equity balance.

Accounting Policies Adopted

The following sections that have published by the Philippine Accounting Standards Board (PASB) and
adoption by the FRBS which became effective for accounting periods beginning on or after July 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

Section 7 Statement of Cash Flows

Section 8 Notes to Financial Statements

Section 10 Accounting Policies, Estimate and Errors

Section 11 Basic Financial Instruments

Section 17 Property and Equipment

Section 22 Liabilities and Equity

Section 23 Revenue

Section 27 Impairment of Assets

Section 28 Employees Benefits

Section 32 Events after the End of the Reporting Period

Section 33 Related Party Disclosures

Section 35 Transition of the PFRS for SMEs

The adoption of the above section, upon which the company has opted to adopt early, did not have any
significant effect on the Company’s financial statements.

Section 3. “Financial statement Presentation”, explains fair presentation of financial statement, what
compliance with PFRS for SMEs requires. What a complete set of financial statement is. This section
prescribes the basis for presentation of general purpose financial statement for SMEs to ensure
comparability, both with the entity’s financial statements of previous periods and with the financial
statements of other entities. It set out overall requirements for the presentation of financial statements,
guidelines for their structure and minimum requirements for their content.

Section 4. “Statement of financial position”, sets out the information that is to be presented in a
statement of financial position and how to present it. The statement of financial position (sometimes
called the balance sheet) presents and entity’s assets, liabilities and equity as of a specific date- the end
of the reporting period and provide the minimum line items, heading and subtotal shall presented if
they will be relevant to an understanding of the entity’s financial position.

Section 5. “Statement of Comprehensive Income”, requires an entity to present its total comprehensive
income for the period- in its financial performance for the period- in one or two financial statements. It
sets out the information that is to be presented in those statements and how to present it.
Section 6. “Statement of Changes in Equity”, sets out requirements for presenting the changes in
entity’s equity or a period, either in statement of changes in equity or if specified conditions are met and
an entity chooses, in a statement of income and retained earnings.

Section 7. “Statement of Cash Flows”, sets out the information that is to be presented in a statement of
cash flows and how to present it. The statement of cash flows provides information about the changes
in cash and cash equivalent of an entity for a reporting period, showing separately changes from
operating activities, investing activities and financial activities.

Section 8. “Notes to Financial Statements”, sets out the principles underlying information that is to be
presented in the notes to financial statement and how to present it. Notes provides narrative
descriptions or disaggregation of items presented I these statements and information about items that
do not qualify for recognition in those statement. In addition to the requirements of this section, nearly
every other section or the PFRS requires disclosures that are normally presented in the notes.

Section 10. “Accounting Policies, Estimate and Errors”, Provides guidance for selecting and applying the
accounting policies used in preparing statements. It also covers changes in accounting estimates and
correction of errors in prior period financial statement.

Section 11. “Basic Financial Instruments”, deals with recognizing, measuring and disclosing basic
financial instrument 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 liability is recognized initially, an entity shall measure it at the transaction price unless
the arrangement constitute, in effect, a financing transaction.

Section 17. “Property and Equipment”, prescribe the accounting treatment for property equipment so
that users of the financial statement can discern information about an entity’s investment in its property
equipment and the charges in such investment. The principal issues in accounting for property and
equipment are the recognition of the assets, the determination of their carrying amounts and the
depreciation charges and equipment losses to be recognized in relation to them. An entity shall measure
an item of property and equipment is the cash price equivalent at the recognition date. If payment is
deferred beyond normal credit terms, the cost is the value of all future payments.

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 owner).

Section 23.” Revenue“, prescribe the accounting treatment of revenue arising from certain types of
transactions and events. The primary issue in accounting for revenue is determining when to recognized
revenue. Revenue is recognized when it is probable that future economic benefits will flow to the entity
and these benefits can be measured reliably. This section identifies the circumstances I which these
criteria will be met and, therefore, revenue will be recognized. It also provides practical guidance on the
application of these criteria. An entity shall measure revenue at the fair value of the consideration
received and receivable.

Section 27.” Impairment of Assets”, prescribe the procedure 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 of or sake of the asset. If this is the case, the asset is describes to be paired
and the standard requires the entity to recognize an impairment loss.

Section 28. “Employees Benefits”, deals with accounting and reporting by the plan to all participants as a
group. It does not deal with reports to individual participants about their retirement benefit rights. An
entity shall recognize the cost of all employee benefits to which its employees have become entitled as a
result of service rendered to the entity during the reporting period: (a) as a liability; (b) as an expense.
This section shall be applied in the financial statement of retirement benefit plans such financial
statement are prepared.

Section 32.” Events after the End of the Reporting Period”, defines events after the end of the reporting
period and set out principles for recognizing, measuring and disclosing those events. Events after the
end of the reporting period are those events favorable and unfavorable that occur between the end of
the reporting period and date when financial statements are authorized for issue. Its objective is to
prescribe: (a) when an entity should adjust its financial statement for events after the reporting period;
(b) the disclosures that an entity should give about the date when the financial statement were
authorized for issue and about events after the reporting period. It also requires that an entity should
not prepare its financial statement on a going concern if events after the reporting period indicate that
the going concern assumption is not appropriate.
The Property and Equipment is measured at cost. The valuation was made on the basis of the fair
market value determined by referring to the character and utility of the property, and
comparable property which has been sold recently in the locality where the property is located.
Management believes that the basis of the fair value is reasonable.

Financial Assets and Liabilities

The Company requires certain financial assets and liabilities to be a fair value, which requires use
of extensive accounting estimates and judgments. While significant components of air value
measurement were determined using verifiable objective evidence (i.e. interest and volatility
rates), the amount changes in fair value with differ if the Company utilized different valuation
methodologies. Any changes in fair value of these financial assets and liabilities would affect
directly the statements of income and equity, as appropriate.

Impairment of Non-Financial Assets

The Company assesses the value of property 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 estimate and assumptions that can materially
affect the financial statements. Future events could cause the Company to conclude that the
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 preparations of estimates future cash flows involved significant judgment and estimations.
While the Company believes that assumptions are appropriate and reasonable, significant
changes in these assumptions may materially affect the Company’s assessment of recoverable
values and may lead the future additional impairment charges.

Revenue Recognition

The Company’s 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 recognition.
However, there is no assurance that such use of estimates may not material adjustments in the
future periods.

Sales are recognized upon payment of at least is recognized in the statements of operations on
transaction date and upon completion of services.