3.2 Consolidation
The controlled entities (funds) are all those over which the controlling entity has
the power to govern the financial and operating policies. Inter-group transactions,
balances, and unrealized gains and losses on transactions between entities and
funds are eliminated in full. The LGU maintains special accounts under the
General Fund:
• General Fund - Proper
• 20% Development Fund
3.3 Revenue recognition
Revenue from non-exchange transactions
Taxes, fees, and fines
The LGU recognizes revenues from taxes and fines when the event occurs and
the asset recognition criteria are met. To the extent that there is a related
condition attached that would give rise to a liability to repay the amount, liability
is recognized instead of revenue. Other non-exchange revenues are recognized
when it is improbable that the future economic benefit or service potential
associated with the asset will flow to the entity and the fair value of the asset can
be measured reliably.
Transfers from other government entities
Revenues from non-exchange transactions with other government entities are
measured at fair value and recognized on obtaining 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 LGU and can be measured reliably.
Revenue from exchange transactions
Rendering of services
The LGU recognizes revenue from the rendering of services 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
only to the extent that the expenses incurred.
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