ACCCOB2 PORTFOLIO
Reflection paper presented to the Accountancy Department
In partial fulfillment of the course requirements in ACCCOB2-K37
CHUA, Jacob Nathanael
DECENA, Kyle Adrianne
ACCCOB2-K37
EQUITY/DEBT INSTRUMENTS
Filinvest Development Corporation uses both debt and equity instruments to gain
additional passive income. Having these two financial instruments is beneficial for the
company because it gives them more financial flexibility. Placing the company’s extra
money for investments is a much wiser decision than placing it in the bank. As of 2022,
Filinvest utilizes 4 kinds of financial instruments or investments which comprise of
Financial assets at amortized cost (debt instruments), Financial assets at FVOCI (for debt
instruments), Financial assets designated at FVOCI (for equity instruments), and Financial
assets at FVPL. First, for Financial Assets at Amortized Cost, Filinvest included investments
in government securities and private bonds as financial assets at amortized cost and
deducted allowance for impairment loss in its computation totaling Php 63,546,191 for its
2022 FAAC as provided in Figure 2.2. Second, for Financial Assets at FVOCI (Debt
Instruments), Filinvest included their investments in government debt securities (totaling
Php 10,220,132) and private bonds (totaling Php 6,511,186) as provided in Figure 2.3. Third,
for Financial Assets Designated at FVOCI (Equity Instruments), Filinvest included their
investments in quoted equity securities (totaling Php 598,078) and unquoted equity
securities (Php 47,929) as provided in Figure 2.3. Fourth, for Financial Assets at FVPL,
Filinvest’s financial assets at FVPL include investments in government securities (totaling
Php 1,903,956), private bonds (Php 44,011), and equity securities (totaling Php 10,343) as
shown in Figure 2.4. In conclusion, Filinvest's total financial instruments indicate that they
have strong financial flexibility since they have large amounts of financial instruments in
which they can gain passive incomes. The increase of all of its 4 investments for the year
2022 indicates that Filinvest wisely spends its extra money.
INVENTORIES
Inventories are essential in a company’s annual report and financial statements.
Firstly, they directly show the profitability of the company and show the valuation of the
inventories which affect the calculations for gross and net profit. The inventories also show
a substantial portion of the company's assets, specifically the current assets. The efficient
management of inventories is crucial for the liquidity of the company as too much
inventory can lessen cash and increase costs while too little inventories can lead to loss of
sales and shortage. Transparency in terms of inventory disclosure ensures compliance with
standards and laws while also informing investors and stakeholders as they assess the
financial health of the company. Overall, inventories play an important role in financial
reporting, shaping the face of a company’s performance and allowing more informed
decision-making for stakeholders.
As seen in Figure 2.1, Filinvest Development Corporation’s real estate inventories
were reported at Php 79,659,361 (in thousands) at the end of 2022. This was a 3% increase
from the previous year which was recorded at Php 77,528,774. In the same figure, Coal,
Spare Parts and Other Inventories are recorded at Php 2,316,669 for 2022, which is an over
60% increase from the previous year which was recorded at Php 1,409,560. Figure 2.5
shows the notes of the real estate inventories account. Lots, condominium and residential
units for sale and land and land development fall under the real estate inventories listed at
Php 46,681,349 and Php 32,978,012 respectively. The breakdown under the lots,
condominium and residential units for sale contained construction/development costs
incurred, land costs, capitalized borrowing costs, and cost of inventories sold. The land and
land development’s breakdown compared land acquisitions and site development and
incidental costs. In figure 2.6, shows the notes to the coal, spare parts, and other
inventories. The breakdown includes power inventories, listed at Php 1,854,713, sugar
inventories listed at Php 394,844, and Hospitality inventories at Php 67,112, for a total of
Php 2,316,669.
In conclusion, the financial data presented in financial statements provide insights
into Filinvest Development Corporation's inventory management and performance in 2022.
The increase in real estate inventories, particularly in lots, condominiums, residential units,
and land development, suggests ongoing investment and expansion in these sectors.
Similarly, the significant surge in coal, spare parts, and other inventories underscores
diversification efforts and potential growth opportunities in various industries such as
power, sugar, and hospitality. These figures reflect the corporation's strategic allocation of
resources and its proactive approach to adapting to market demands. Such detailed
breakdowns offer stakeholders a comprehensive view of the company's assets and
operations, aiding in informed decision-making and fostering confidence in Filinvest's
financial stability and future prospects.
APPENDIX
Figure 2.1: Consolidated Statement of Financial Position
Figure 2.2: Financial Assets at Amortized Cost
Figure 2.3 Financial Assets at FVOCI
Figure 2.4 Financial Assets at FVPL
Figure 2.5: 14th Note (Real Estate Inventories)
Figure 2.6: Note 15 (Coal, Spare Parts and Other Inventories)
