BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA
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not from the initial recognition (except in the case of a combination of business) of other assets or liabilities in<br />
a transaction that does not affect the fiscal outcome or the accounting result.<br />
The deferred tax assets and liabilities recognized are reassessed by the consolidated entities at each<br />
balance sheet date in order to ascertain whether they are still current, and the appropriate adjustments are<br />
made on the basis of the findings of the analyses performed.<br />
The income and expenses directly recognized in equity that do not increase or decrease taxable income are<br />
accounted as temporary differences.<br />
2.2.11. PROVISIONS, CONTINGENT ASSETS <strong>AND</strong> CONTINGENT LIABILITIES<br />
The heading “Provisions” in the accompanying consolidated balance sheets includes amounts recognized to<br />
cover the Group’s current obligations arising as a result of past events. These are certain in terms of nature<br />
but uncertain in terms of amount and/or cancellation date. The settlement of these obligations is deemed<br />
likely to entail an outflow of resources embodying economic benefits (see Note 25). The obligations may<br />
arise in connection with legal or contractual provisions, valid expectations formed by Group companies<br />
relative to third parties in relation to the assumption of certain responsibilities or through virtually certain<br />
developments of particular aspects of applicable regulation, specifically draft legislation to which the Group<br />
will certainly be subject.<br />
Provisions are recognized in the balance sheet when each and every one of the following requirements is<br />
met: The Group has an existing obligation resulting from a past event and, at the consolidated balance sheet<br />
date, it is more likely than not that the obligation will have to be settled; it is probable that to settle the<br />
obligation the entity will have to give up resources embodying economic benefits; and a reliable estimate can<br />
be made of the amount of the obligation. This heading includes provisions for tax and legal litigation.<br />
Contingent assets are possible assets that arise from past events and whose existence is conditional on,<br />
and will be confirmed only by the occurrence or non-occurrence of, events beyond the control of the Group.<br />
Contingent assets are not recognized in the consolidated balance sheet or in the consolidated income<br />
statement; however, they are disclosed in the notes to financial statements, provided that it is probable that<br />
these assets will give rise to an increase in resources embodying economic benefits (see Note 36).<br />
Contingent liabilities are possible obligations of the Group that arise from past events and whose existence is<br />
conditional on the occurrence or non-occurrence of one or more future events beyond the control of the<br />
entity. They also include the existing obligations of the entity when it is not probable that an outflow of<br />
resources embodying economic benefits will be required to settle them or when, in extremely rare cases,<br />
their amount cannot be measured with sufficient reliability.<br />
2.2.12. POST-EMPLOYMENT BENEFITS <strong>AND</strong> OTHER LONG-TERM COMMITMENTS TO EMPLOYEES<br />
Below is a description of the most significant accounting criteria relating to the commitments to employees,<br />
related to post-employment benefits and other long term commitments, of certain Group companies in Spain<br />
and abroad (see Note 26).<br />
Commitments valuation: actuarial assumptions and gains/losses recognition<br />
The present values of the commitments are quantified on a case-by-case basis. The valuation method used<br />
for current employees is the projected unit credit method, which views each year of service as giving rise to<br />
an additional unit of benefit entitlement and measures each unit separately.<br />
In adopting the actuarial assumptions, the following are taken into account:<br />
• They are unbiased, in that they are neither imprudent nor excessively conservative.<br />
• They are mutually compatible, reflecting the economic relationships between factors such as<br />
inflation, rates of salary increase, discount rates and expected return of assets. The expected return<br />
of plan assets in the post-employment benefits is estimated taking into account the market<br />
expectations and the distribution of such assets in the different portfolios.<br />
• The future levels of salaries and benefits are based on market expectations at the balance sheet<br />
date for the period over which the obligations are to be settled.<br />
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