CENTRAL LUZON STATE UNIVERSITY

College of Business and Accountancy

Science City of Muñoz, Nueva Ecija

SM Investments Corporation
Final Quiz
ACCTG 3210

SUBMITTED BY:

Fernandez, Mahalia C.
Santos, Dhainniel DG.
Santos, Pauline Claire R.
Tariga, Jeanine Joy M.

BSAC 3-1

SUBMITTED TO:

Bianca C. Taylan
Professor

April 15, 2026

A. STATEMENT OF FINANCIAL POSITION
B. STATEMENT OF CHANGES IN EQUITY
C. COMPONENTS OF SHAREHOLDER’S EQUITY PRESENTED
a) Capital Stock - Capital stock is the maximum number of shares that can be issued by a
corporation based on its charter. In the case of SM Investments Corporation, this is the
maximum amount of equity capital that it can secure out of investors to fund its massive
business activities in retail, real estate, and banking.

b) Additional Paid-in Capital - Additional paid-in capital represents the amount contributed
by shareholders in excess of the par value of shares. This is the desire of investors to have
a premium to own the company in SMIC, as the market believes in the growth, profitability,
and good business portfolio of the company. This extra capital is used in expansion
ventures like mall development, retail store expansion, and financial institution investment.

c) Treasury Stock - Treasury stock is the stock of SMIC that has been bought back by the
company. These are shares that are not outstanding and hence lower the equity of
shareholders. In the case of SMIC, treasury shares can be employed to perform a strategic
role such as stabilizing the share prices, enhancing financial ratios, or reissuing shares in
the future to fund or compensate employees’ programs.

d) Equity Adjustments from Common Control Transactions - This element is because of

the transactions among the bodies that are under common ownership in the SM Group.
There are no gains or losses related to these transactions as they are reflected in profit or
loss, but directly in equity. In the case of SMIC, this represents internal restructuring
processes, e.g., transfer of assets or investments between subsidiaries, whereby they can
organize their groups efficiently without the impact on reported income.

e) Cost of Parent Common Shares Held by Subsidiaries - This is the value of SMIC shares
held by its subsidiaries. As with treasury stock, it is a reduction of equity, as the group
cannot claim to own itself. In the case of SMIC, this is the indication of the complexity of
corporate structure and intercompany relations in the group.

f) Cumulative Translation Adjustment - This entry is the translation of foreign currency

differences because of foreign business of SMIC, e.g. development of property in China.
The exchange rate may appreciate or depreciate the value of foreign assets in terms of
Philippine pesos. This element demonstrates the effect of the world economic conditions
and currency changes on the equity of the company, although no cash flow may be
involved.

g) Fair Value Change on Cash Flow Hedges and Others - These gains or losses of hedging
instruments utilized by SMIC in dealing with financial risks, e.g. interest rate or foreign
currency risks. Such changes are accrued in the equity under other comprehensive income
till realized. In the case of SMIC, this is a sign of its risk management policies to safeguard
future cash flows and financial stability.

h) Unrealized Gain (Loss) on Financial Assets at FVOCI - This represents the cumulative
change in fair value of SM’s financial assets classified as FVOCI, such as strategic equity
and debt investments. As disclosed in the 2024 financial statements, these gains or losses
 are recognized in other comprehensive income instead of profit or loss and are affected by
market price movements, interest rates, and economic conditions. They remain in equity
until realized, reflecting potential future impacts on earnings and the sensitivity of the
Group’s investment portfolio.

i) Remeasurement Gain (Loss) of Defined Benefit Obligation - This account arises from
actuarial remeasurements of SM’s retirement benefit obligations, including changes in
discount rates, salary projections, and actual versus expected returns on plan assets. In the
2024 report, these are recognized in other comprehensive income and accumulated in
equity, not reclassified to profit or loss. This reflects adjustments in long-term employee
obligations and shows how changes in assumptions directly affect equity.

j) Share in Other Comprehensive Loss of Associates – Net - This represents SM’s share
in the other comprehensive income or loss of its associates, particularly its banking
investments accounted for using the equity method. As indicated in the financial
statements, these include fair value changes, actuarial adjustments, and other OCI items of
associates recognized directly in equity. It shows how SM’s equity is influenced by the
performance and valuation changes of investee companies.

k) Appropriated Retained Earnings - Appropriated retained earnings are portions of

accumulated profits set aside for specific purposes such as expansion, capital expenditures,
or compliance with restrictions. The 2024 report highlights that some earnings, particularly
from subsidiaries, are not yet available for dividends until remitted to the parent. This
reflects internal and external limitations on the use of retained earnings while still forming
part of total equity

l) Unappropriated Retained Earnings - This represents accumulated profits available for

dividend distribution and reinvestment. In 2024, retained earnings increased due to SM’s
₱82.6 billion net income, offset by ₱11.0 billion dividends declared. It reflects the
company’s profitability, dividend policy, and capacity to fund future operations and
growth.

m) Non-controlling Interests - Non-controlling interests represent the portion of equity in

SM’s subsidiaries attributable to minority shareholders. The 2024 financial statements
show NCI at about ₱239.1 billion, driven by the share in net income and net assets of
partially owned subsidiaries. This highlights that part of the Group’s equity belongs to
external investors.
 D. ANALYSIS OF CHANGES IN SHAREHOLDERS’ EQUITY DURING THE YEAR
AND IDENTIFICATION OF KEY DRIVERS OF INCREASE AND DECREASE
COMPONENTS OF
CHANGES IN
STATEMENT OF CAUSE OF CHANGE
EQUITY
CHANGES IN EQUITY
Capital Stock Did not changed N/A
Additional Paid-in Capital Decreased by There were transactions with non-
₱85,203,000 controlling interests that amounted to
₱85,203,000
Treasury Stock Did not changed N/A
Equity Adjustments from Decreased by The company had a business
Common Control ₱288,257,000 combination and it resulted to a
Transactions (₱288,257,000).
Cost of Parent Common Did not changed N/A
Shares Held by Subsidiaries
Cumulative Translation Increased by There was a currency translation
Adjustment ₱233,910,000 difference of ₱233,910,000
Fair Value Changes on Cash Decreased by There was a loss of ₱252,091,000
Flow Hedges and Others ₱252,091,000
Unrealized gain on financial Decreased by The following events resulted to the
assets at FVOCI ₱1,176,410,000 ₱9,898,983:
• There was a recorded
₱1,176,057,000 of Unrealized
gain on financial assets at
FVOCI.
• The financial assets at FVOCI
amounted to ₱353,000
Remeasurement loss on Increased by There was a gain in the remeasurement
defined benefit ₱1,051,335,000 of the defined benefit asset/obligation
asset/obligation ₱1,051,335,000
Share in other Increased by There was an additional loss of
comprehensive loss of ₱396,083,000 associates that amounted to
associates and joint ventures ₱396,083,000
- net
Appropriated Retained Decreased by The following events are the cause of
Earnings ₱7,000,000,000 the decrease in the appropriated
retained earnings:
• There was a ₱37,000,000,000
appropriation of retained
earnings in November 10, 2021
that was reversed in November
13, 2024.
• The Board of Directors
approved the appropriation of
₱30,000,000,000 retained
 earnings for new investments
for the years 2025 to 2027.
Unappropriated Retained Increased by The increase of unappropriated
Earnings ₱78,612,180,000 retained earnings was caused by these
events:
• The net income of
₱82,608,707,000 increased the
retained earnings
• The financial assets at FVOCI
amounted to ₱353,000
• The Board of Directors
declared and paid the
dividends of ₱10,998,210,000
to its shareholders.
• There was a ₱37,000,000,000
appropriation of retained
earnings in November 10, 2021
that was reverted to
unappropriated retained
earnings in November 13, 2024
• The Board of Directors
approved the appropriation of
₱30,000,000,000 retained
earnings for new investments
for the years 2025 to 2027.
Non-controlling Interest Increased by The increase was caused by the
₱23,525,205,000 following events:
• The net income of
₱32,044,199,000
• Loss in the other
comprehensive income
amounting to ₱32,008,814,000
• The transactions from other
non- controlling interest of
₱9,296,000
• The approved cash dividends of
₱9,279,231
• The net change of the non-
controlling interest was
₱786,326,000
TOTAL EQUITY Increased by
₱94,224,586,000
 Based on the Statement of Changes in Equity, the component with the most significant
change is the unappropriated retained earnings. In this component, there were various transaction
like the addition and the reversal of appropriated retained earnings, loss in the other comprehensive
income, transactions and changes from the non-controlling interest, and the payment of dividends
to the shareholders. After taking into account all the transactions that happened in 2024, the total
equity of the company is ₱866,424,791,000.

E. GUIDE QUESTIONS
1. Is the company’s equity generally increasing or decreasing?

It can be concluded about the good performance of the financial situation of SM

Investments Corporation because of its financial documents. In particular, the corporation
increased its total equity from ₱772.2 billion to ₱866.4 billion (+12%) for one year between
2023 and 2024, resulting in a growth trend.

2. What does the trend in equity suggest about the company’s performance?

First, it should be noted that the growth in equity of the corporation shows good results in
its financial situation. The company is successful enough to get a high profit from its
operations. As a result, it can increase assets relative to liabilities. The retention of net
income in retained earnings can be seen as an example of the benefit of profitable
operations of the corporation. The fact that it pays dividends means that it uses its net
income for paying dividends after sharing profit with shareholders.

3. Based on the equity section, what can you infer about the company’s financial
strategy?

Therefore, the company adopted a good financial strategy in general. First, the company
uses its profit for developing its business further; and second, it pays dividends to
encourage shareholders to invest in the company or return money to them. Also, the growth
in equity is higher than in liabilities.