Revenue from Non-Exchange Transactions (Taxes and Transfers)

Philippine Public Sector Accounting Standards 23

Revenue from Non-Exchange Transactions
(Taxes and Transfers)
Table of Contents
PAG
Number
BACKGROUND
INTRODUCTION TO THE IPSAS 23
PHILIPPINE APPLICATION GUIDANCE TO IPSAS 23
Scope

Taxes

Services In-Kind

Effective Date

PPSAS 23 Revenue from Non-Exchange Transactions

January 2014

Page 1

Revenue from Non-Exchange Transactions (Taxes and Transfers)

Philippine Public Sector Accounting Standards 23 Revenue from Non-Exchange Transactions (Taxes and Transfers)
Background
This Philippine Public Sector Accounting Standard (PPSAS) 23 consists
of International Public Sector Accounting Standard (IPSAS) 23,
Revenue from Non-Exchange Transactions (Taxes and Transfers), and
the Philippine Application Guidance (PAG) prepared to suit the
Philippine public sector situation.
The IPSAS 23 was issued in December 2006 by the International Public
Sector Accounting Standards Board (IPSASB) of the International
Federation of Accountants (IFAC). This includes amendments resulting
from IPSASs issued up to January 15, 2012.
The PAG (in italics) provides supplementary guidance on the proper
implementation of
IPSAS 23 and also the reason for not adopting
some paragraphs of the IPSAS 23.
Introduction to the IPSAS 23
This IPSAS was developed by the IPSASB because: (a) Non-exchange
revenues (taxes and transfers) form the majority of revenue for most
public sector entities; and (b) Until now there has been no generally
accepted international financial reporting standard that addresses the
recognition and measurement of taxation revenue.
The objective of this Standard is to prescribe requirements for the
financial reporting of revenue arising from non-exchange transactions,
other than non-exchange transactions that give rise to an entity
combination. This Standard deals with issues that need to be
considered in recognizing and measuring revenue from non-exchange
transactions, including the identification of contributions from owners.
Philippine Application Guidance to IPSAS 23
Scope
PAG1.Paragraph 3 deals with the applicability of this Standard to all
public sector entities other than Government Business
Enterprises (GBEs).
GBE is an entity that has all the following characteristics: (a) Is an
entity with the power to contract in its own name; (b) Has been
assigned the financial and operational authority to carry on a
PPSAS 23 Revenue from Non-Exchange Transactions
January 2014

Page 2

Revenue from Non-Exchange Transactions (Taxes and Transfers)

business; (c) Sells goods and services, in the normal course of its
business, to other entities at a profit or full cost recovery; (d) Is
not reliant on continuing government funding to be a going
concern (other than purchases of outputs at arms length); and
(e) Is controlled by a public sector entity.
This standard shall be applied to all National Government
Agencies (NGAs), Local Government Units (LGUs) and
Government-Owned and/or Controlled Corporations (GOCCs) not
considered as GBEs.
Taxes
PAG2.Paragraph 59 and 60 provide that an entity shall recognize an
asset in respect of taxes when the taxable event occurs and the
asset recognition criteria are met. Resources arising from taxes
satisfy the criteria for recognition as an asset when it is probable
that the inflow of resources will occur and their fair value can be
reliably measured. The degree of probability attached to the
inflow of resources is determined on the basis of evidence
available at the time of initial recognition, which includes, but is
not limited to, disclosure of the taxable event by the taxpayer.
The aforestated provisions shall not be adopted. Instead, taxes
and the related fines and penalties shall be recognized when
collected or when these are measurable and legally collectible.
The related refunds, including those that are measurable and
legally collectible, shall be deducted from the recognized tax
revenue.
Services In-kind
PAG3.Paragraph 98 provides that an entity may, but is not required, to
recognize services in-kind as revenue and as an asset. While
paragraphs 99 to 101 define and give examples of services-in
kind. Paragraph 99 also provides that since these assets are
immediately consumed, an expense is simultaneously recognized
with a corresponding reduction of the asset.
Considering the complexity of the determination and recognition
of an asset and income and the eventual recognition of
expenses, the provisions of these paragraphs shall not be
adopted. However, these shall be disclosed in accordance with
paragraph 108.
Effective Date
PAG4.This PPSAS shall apply for annual financial statements covering
periods beginning January 1, 2014.
PPSAS 23 Revenue from Non-Exchange Transactions
January 2014

Page 3