Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136
NEA Memorandum No. 02-04 outlines the accounting guidelines for Electric Cooperatives (ECs) regarding the condonation of loans as stipulated in Section 60 of the Electric Power Industry Reform Act of 2001 (EPIRA). The memorandum states that the Philippine Power Sector Assets and Liabilities Management Corporation (PSALM) will assume outstanding loans incurred by ECs for rural electrification, with specific terms for compliance to maintain this status. ECs must present these loans as "Donated Capital PSALM" in their financial statements, and failure to adhere to the conditions may result in the revocation of this assumption. The memorandum also provides detailed accounting entries for recording the assumption and potential revocation of these loans. It takes effect following the approval of the Energy Regulatory Commission to adjust rates due to the loan condonation.
Quick Answers
- What is Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136 about?
- NEA Memorandum No. 02-04 outlines the accounting guidelines for Electric Cooperatives (ECs) regarding the condonation of loans as stipulated in Section 60 of the Electric Power Industry Reform Act of 2001 (EPIRA). The memorandum states that the Philippine Power Sector Assets and Liabilities Management Corporation (PSALM) will assume outstanding loans incurred by ECs for rural electrification, with specific terms for compliance to maintain this status. ECs must present these loans as "Donated Capital PSALM" in their financial statements, and failure to adhere to the conditions may result in the revocation of this assumption. The memorandum also provides detailed accounting entries for recording the assumption and potential revocation of these loans. It takes effect following the approval of the Energy Regulatory Commission to adjust rates due to the loan condonation.
- What type of law is NEA Memorandum No. 02-04?
- Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136 (NEA Memorandum No. 02-04) is a Philippine Other Rules and Procedures enacted by the Congress of the Philippines.
- When was Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136 enacted?
- Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136 (NEA Memorandum No. 02-04) was enacted on May 28, 2004.
- What is the citation for Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136?
- Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136, NEA Memorandum No. 02-04, May 28, 2004 (Philippines)
Law Information
- Reference Number
- NEA Memorandum No. 02-04
- Date Enacted
- Category
- Other Rules and Procedures
- Subcategory
- Energy and Electric Power
- Jurisdiction
- Philippines
- Enacting Body
- Congress of the Philippines
Full Law Text
May 28, 2004
NEA MEMORANDUM NO. 02-04
| TO | : | All Electric Cooperatives |
| SUBJECT | : | Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136 (EPIRA) |
I. BACKGROUND
The enactment of Republic Act 9136 otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA) brought about major changes and reforms in the electric power industry including the restructuring of the Electric Cooperatives (ECs). Section 60 of the said act and Rule 31 of its implementing Rules and Regulations provide that all outstanding financial obligations of Electric Cooperatives to NEA and other government agencies incurred for the purpose of financing the rural electrification program shall be assumed by PSALM Corporation in accordance with the program approved by the President of the Philippines. However, any Electric Cooperatives which shall transfer ownership or control of its assets, franchise or operations within five (5) years from the condonation of debts shall repay PSALM Corp. the total debts including accrued interest thereon. Also, Section 5 of EO 119 enumerates the terms and conditions to be complied with in order for the assumption of rural electrification loans to be effective, and failure to continually comply with these terms and conditions shall mean revocation of the assumption by PSALM of the rural electrification loans of ECs.
II. OBJECTIVES
1. To properly reflect in the ECs' books and records the assumption by PSALM of the ECs outstanding loans with NEA as of June 26, 2001.
2. To ensure uniformity on the proper accounting treatment and presentation of the condoned loans in the ECs' financial statements.
III. GUIDELINES
1. ECs' condoned loans with NEA should be presented in a separate account as Donated Capital — PSALM, under the Equities and Margins portion of the Balance Sheet.
2. The amount to be recorded as Donated Capital — PSALM shall reconcile with the Outstanding Rural Electrification Loan balances, as audited by PSALM. For this purpose, ECs can obtain the audited outstanding loan balances from the Treasury Division of Financial Services Department, NEA.
3. Social Program Loans are not considered Rural Electrification loans, hence not assumed by PSALM Corporation.
4. Pro-forma entries
4a. To record assumption by PSALM of the ECs Outstanding Rural Electrification Loans with NEA. BenchStat
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DR
|
CR
|
DR
|
CR
|
||
| 221-224-00 | Long Term Debt-Principal/Interest |
xxx
|
|
|
|
| 221-224-10 | Long Term Debt-Construction |
|
|
xxx
|
|
| 230-239-00 | Matured Long Term and Short |
xxx
|
|
|
|
| Term Debt-Principal |
|
|
|
|
|
| 230-239-10 | Matured Long Term Debt-Construction |
|
|
xxx
|
|
| 230-237-00 | Interest Accrued |
xxx
|
|
|
|
| 230-237-10 | Interest Accrued-Construction |
|
|
xxx
|
|
| 230-240-00 | Matured Interest Payable |
xxx
|
|
|
|
| 230-240-10 | Matured Interest Payable-Construction |
|
|
xxx
|
|
| 450-431-00 | Other Interest Charges |
xxx
|
|
|
|
| 211-208-00 | Donated Capital |
|
xxx
|
|
|
| 270-271-10 | Donated Capital-PSALM |
|
|
|
xxx
|
The accounting entry should properly explain and indicate the nature, status and the circumstance that gave rise to such accounting entry, including the details of the amount of principal, interest, surcharges and other charges of such loans. EDHTAI
4b. To record adjustments due to revocation of assumption of Rural Electrification Loans by PSALM for failure to continually comply with Sec. 5 of EO 119 or if within five (5) years from the assumption of PSALM, an EC transfers ownership or control of its assets, franchise or operations as provided under Sec. 60 of EPIRA.
|
DR
|
CR
|
DR
|
CR
|
||
| 211-208-00 | Donated Capital |
xxx
|
|
|
|
| 270-271-10 | Donated Capital — PSALM |
|
|
xxx
|
|
| 221-224-00 | Long Term Debt-Principal/Interest |
|
xxx
|
|
|
| 221-224-10 | Long Term Debt-Construction |
|
|
|
xxx
|
| 230-239-00 | Matured Long Term and Short |
|
xxx
|
|
|
| Term Debt Principal |
|
|
|
|
|
| 230-239-10 | Matured Long Term Debt-Construction |
|
|
|
xxx
|
| 230-237-00 | Interest Accrued |
|
xxx
|
|
|
| 230-237-10 | Interest Accrued-Construction |
|
|
|
xxx
|
| 230-240-00 | Matured Interest Payable |
|
xxx
|
|
|
| 230-240-10 | Matured Interest Payable-Construction |
|
|
|
xxx
|
IV. EFFECTIVITY
This memorandum shall take effect on the date of the ERC's approval of the provisional authority to reduce rates due to loan condonation.
(SGD.) EDITA S. BUENOAdministrator
Cite This Law
Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136, NEA Memorandum No. 02-04, May 28, 2004 (Philippines)
Guidelines in the Accounting Treatment of EC Condoned Loans due to Section 60 of RA 9136, NEA Memorandum No. 02-04 (Phil. 2004)
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- A Resolution Adopting the Rules and Procedures Governing the Utilization and Disbursements of the Universal Charge-Environmental ChargeERC Resolution No. 18-11 • Jun 27, 2011 • Other Rules and Procedures
- Rules and Regulations Implementing Section 28 of Republic Act No. 9136IRR of Sec. 28 of RA 9136 • Aug 24, 2001 • Implementing Rules and Regulations
- Implementing Rules and Regulations of Republic Act No. 9136IRR of RA 9136 • Feb 27, 2002 • Implementing Rules and Regulations
- Revised Procurement Guidelines and Simplified Bidding Procedures for Electric Cooperatives IRR-RA 10531 (2017)IRR of RA 10531 • Jun 23, 2017 • Implementing Rules and Regulations
- Guidelines on the Implementing Rules and Regulations (IRR) of Section 21 of Republic Act No. 9165 as Amended by Republic Act No. 10640Guidelines on the IRR of RA 9165 • May 28, 2015 • Implementing Rules and Regulations
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