SEC Form 17-A: Annual Report - the solid group inc website

- 50 -
16. TRADE AND OTHER PAYABLES
This account consists of:
Notes 2012 2011
Trade payables 26.6 P 335,534,348 P 304,917,931
Output VAT 48,843,309 37,328,219
Accrued dealers’ incentives 24,375,822 12,364,027
Collection due to STL 26.6 18,706,344 2,331,894
Unearned subscription income 18,143,581 9,167,511
Rental payable 17,671,797 17,354,928
Refundable deposits 17 16,181,595 24,769,241
Retention payable 16,061,269 4,872,185
Reserve for warranty costs 14,545,332 18,354,383
Accrued municipal taxes 14,357,151 8,673,969
Advances from customers 9,542,619 22,623,706
Deferred output VAT 1,505,635 3,032,367
Other accrued expenses 58,423,762 88,287,531
Other payables 35,010,087 38,355,081
P 628,902,651 P 592,432,973
Reserve for warranty costs pertains to amounts recognized by My Solid, SVC and SBC for
expected warranty claims on products sold based on their past experience of the level of
repairs and returns. In addition, provision for warranty claims also includes the amounts
recognized by OSSI for expected warranty claims on consumer electronic products sold by a
certain company owned by the Group’s majority stockholders.
In 2012, SMC derecognized certain accrued expenses and other payables which were acquired
by SMC from the merger with SC (see Note 1.2). Management believes that the possibility of
cash outflows is remote since the purpose for which the liability was recognized no longer
exists. The Gain on Derecognition of Liabilities amounting to P25.1 million is presented
under Other Income Gains in the 2012 consolidated statement of income (see Note 19.2).
In October 2011, the obligation to provide warranties was transferred by My Solid to Mytel
when the latter was handed over the ownership of the brand and consequently became
importer of the inventories from Mytel’s supplier. As a result, Mytel derecognized the
outstanding balance of provision for warranty claims from previous year amounting to
P10.8 million. The income arising from the derecognition of this liability is presented as part
of Reversal of warranty provision under Other Operating Income in the 2011 consolidated
statement of income (see Note 19.1). My Solid and Mytel have merged in 2012
(see Note 1.2).
The changes in the Reserve for Warranty Costs account are as follows:
Notes 2012 2011
Balance at beginning of year P 18,354,383 P 23,359,511
Additional provision for warranty
claims during the year 20 41,465,997 45,072,286
Actual warranty claims
during the year ( 36,118,916) ( 38,173,009 )
Reversals during the year 19.1 ( 9,156,132) ( 11,904,405 )
P 14,545,332 P 18,354,383