2011 Annual Report Financial Supplements - BDO

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BDO Unibank Group accounts for its investments in subsidiaries and non-controlling interest(previously called “minority interest”) as follows:(a) Investments in SubsidiariesSubsidiaries are all entities over which BDO Unibank Group has the power to control interms of financial and operating policies generally accompanying a shareholding of morethan one half of the voting rights. BDO Unibank Group obtains and exercises controlover subsidiaries through voting rights. The existence and effect of potential voting rightsthat are currently exercisable or convertible are considered when assessing whether BDOUnibank Group controls another entity. Subsidiaries are consolidated from the date BDOUnibank Group obtains control until such time that such control ceases.Except as otherwise indicated, the acquisition of subsidiaries are accounted for using theacquisition method (previously called “purchase method” - see Note 2.13). Acquisitionmethod requires recognizing and measuring the identifiable assets acquired, the liabilitiesassumed and any non-controlling interest in the acquiree. The consideration transferredfor the acquisition of a subsidiary is the fair values of the assets transferred, the liabilitiesincurred and the equity interests issued by the BDO Unibank, if any. The considerationtransferred also includes the fair value of any asset or liability resulting from a contingentconsideration arrangement. Acquisition-related costs are expensed as incurred andsubsequent change in the fair value of contingent consideration is recognized directly inprofit or loss.Identifiable assets acquired and liabilities and contingent liabilities assumed in abusiness combination are measured initially at their fair values at the acquisition date. Onan acquisition-by-acquisition basis, the BDO Unibank Group recognizes anynon-controlling interest in the acquiree either at fair value or at the non-controllinginterest’s proportionate share of the acquiree’s net assets.The excess of the consideration transferred, the amount of any non-controlling interest inthe acquiree and the acquisition-date fair value of any previous equity interest in theacquiree over the fair value of the Group’s share of the identifiable net assets acquired isrecognized as goodwill. If this is less than the fair value of the net assets of the subsidiaryacquired in the case of a bargain purchase, the difference is recognized directly as a gain inprofit or loss (see Note 2.13).(b) Transactions with Non-controlling InterestsBDO Unibank Group’s transaction with non-controlling interests that do not result inloss of control are accounted for as equity transactions – that is, as transaction with theowners of BDO Unibank Group in their capacity as owners. The difference between thefair value of any consideration paid and the relevant share acquired of the carrying valueof net assets of the subsidiary is recognized in equity. Disposals of equity investments tonon-controlling interests results in gains or losses for the Group that are also recognizedin equity.www.bdo.com.ph 27
NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)When BDO Unibank Group ceases to have control, any interest retained in the subsidiaryis remeasured to its fair value, with the change in carrying amount recognized in profit orloss. The initial carrying amount for the purposes of subsequently accounting for theinterest retained as an associate, joint venture or financial asset is the fair value. Inaddition, any amounts previously recognized in other comprehensive income in respect ofthat entity are accounted for as if BDO Unibank Group had directly disposed of therelated resources or liabilities. This may mean that amounts previously recognized inother comprehensive income are reclassified to profit or loss.In BDO Unibank Group’s financial statements, the non-controlling interest component isshown in BDO Unibank Group’s statement of changes in equity and in BDO UnibankGroup’s statement of income. Non-controlling interests in 2011 and 2010 represent theinterests not held by BDO Unibank Group in BDO Leasing and Finance, Inc., BDO EliteSavings Bank, Inc. and Equimark – NFC Development Corp.2.05 Segment ReportingOperating segments are reported in a manner consistent with the internal reporting providedto the BDO Unibank Group’s chief operating decision-maker. The chief operating decisionmakeris responsible for allocating resources and assessing performance of the operatingsegments.In identifying its operating segments, management generally follows the BDO UnibankGroup's products and services as disclosed in Note 5, which represent the main products andservices provided by the BDO Unibank Group.Each of these operating segments is managed separately as each of these services requiresdifferent technologies and resources as well as marketing approaches. All inter-segmenttransfers are carried out at arm's length prices.The measurement policies of the BDO Unibank Group uses for segment reporting underPFRS 8, Operating Segments, is the same as those used in its financial statements. In addition,corporate assets which are not directly attributable to the business activities of any operatingsegment are not allocated to a segment.There have been no changes from prior periods in the measurement methods used todetermine reported segment profit or loss.The BDO Unibank Group’s operations are organized according to the nature of the productsand services provided. Financial information on operating segments is presented in Note 5.2.06 Financial AssetsFinancial assets include cash and other financial instruments. Financial assets, other thanthose designated and effective as hedging instruments, are classified into the followingcategories: at FVTPL, loans and receivables, held-to-maturity (HTM) and available-for-sale(AFS). Financial assets are assigned to the different categories by management on initialrecognition, depending on the purpose for which the investments were acquired. Except forderivative financial instruments and financial assets designated at FVTPL, the designation offinancial assets is re-evaluated at the end of each reporting period at which date a choice ofclassification or accounting treatment is available, subject to compliance with specificprovisions of applicable accounting standards.
Page 7 and 8: REPORT OFINDEPENDENT AUDITORSReport
Page 9 and 10: STATEMENTS OFINCOMEFOR THE YEARS EN
Page 12: BALANCE AT JANUARY 1, 2009 P 23,020
Page 16 and 17: FOR THE YEARS ENDED DECEMBER 31, 20
Page 18 and 19: 1.02 Approval of Financial Statemen
Page 22 and 23: (ii) Philippine Interpretation IFRI
Page 24 and 25: PFRS 7 (Amendment), Financial Instr
Page 26 and 27: (v)PFRS 9, Financial Instruments: C
Page 30 and 31: Regular purchases and sales of fina
Page 32 and 33: Subsequent to initial recognition,
Page 34: Certain derivatives may be designat
Page 37 and 38: NOTES TOFINANCIAL STATEMENTSDECEMBE
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COMPANY HEADQUARTERSBDO Unibank, In
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2011 Annual Report Financial Supplements - BDO

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