2011 Annual Report Financial Supplements - BDO

NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)(ii) PAS 12 (Amendment), Income Taxes – Deferred Tax: Recovery of Underlying Assets(effective from January 1, 2012). The amendment provides an exception to theexisting principle in PAS 12 that recovery of the carrying amount of investmentproperty measured at fair value under PAS 40, Investment Property, will be ornormally be through sale. The amendment introduces a rebuttable presumption thatthe measurement of a deferred tax liability or asset on an investment propertymeasured at fair value should reflect the tax consequence of recovering the carryingamount entirely through sale. The presumption is rebutted for depreciable investmentproperty (e.g., building) measured at fair value that is held with an objective toconsume substantially the economic benefits embodied in the asset over time, ratherthan through sale. As a result of the amendment, Standing Interpretation Committee(SIC) 21 Income Taxes – Recovery of Revalued Non-Depreciable Assets, isaccordingly withdrawn. The management does not expect that this amendment willimpact the financial statements since BDO Unibank Group does not measure itsinvestment property at fair value.(iii) PAS 19 (Amendment), Employee Benefits (effective from January 1, 2013). Theamendment made a number of changes as part of the improvements throughout thestandard. The main changes relate to defined benefit plans as follows:eliminates the corridor approach under the existing guidance of PAS 19 andrequires an entity to recognize all gains and losses arising in the reporting period;streamlines the presentation of changes in plan assets and liabilities resulting inthe disaggregation of changes into three main components of service costs, netinterest on net defined benefit obligation or asset, and remeasurement; and,enhances disclosure requirements, including information about thecharacteristics of defined benefit plans and the risks that entities are exposed tothrough participation in them.Currently, BDO Unibank Group is using the corridor approach. The unrecognizedactuarial losses of BDO Unibank Group and the Parent Bank as of December 31,2011 amounted to P4,520 and P4,252, respectively, which will be retrospectivelyrecognized as loss in other comprehensive income in 2013.(iv) PFRS 7 (Amendment), Financial Instruments: Disclosures – Transfers of Financial Assets(effective from July 1, 2011). The amendment requires additional disclosures that willallow users of financial statements to understand the relationship between transferredfinancial assets that are not derecognized in their entirety and the associated liabilities;and, to evaluate the nature of, and risk associated with any continuing involvement ofthe reporting entity in financial assets that are derecognized in their entirety. BDOUnibank Group does not usually enter into this type of arrangement with regard totransfer of financial asset, hence, the amendment may not significantly change BDOUnibank Group’s disclosures in its financial statements.