Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount reported in the
consolidated statement of financial position 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 assets and settle the liabilities simultaneously.
Fair value of financial instruments
The fair value of financial instruments that are traded in active markets at each
reporting date is determined by reference to quoted market prices or dealer price
quotations (bid price for long positions and ask price for short positions), without any
deduction for transaction costs.
f. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash in bank, deposits on call
and highly liquid investments with an original maturity of three months or less, which
are readily convertible to known amounts of cash and are subject to 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.
g. 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 nominal cost),
the cost of the inventory is its fair value at the date of acquisition.
h. Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policy retrospectively. The
effects of changes in accounting policy are applied prospectively if retrospective
application is impractical.
The LGU recognizes the effects of changes in accounting estimates prospectively by
including in surplus or deficit.
i. Related parties
The LGU regards a related party as a person or an entity with the ability to exert
control individually or jointly, or to exercise significant influence over the LGU, or
vice versa. Members of key management are regarded as related parties and comprise
the Mayor, Vice-Mayor, Sanggunian Members, Committee Officials and Members,
Accountant, Treasurer, Budget Officer, and all Chiefs of Departments/Divisions.
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