2011 Annual Report Financial Supplements - BDO

(b) Service charges, fees and commissions – Service charges, fees and commissions are generallyrecognized when the service has been provided. Loan syndication fees are recognized asrevenue when the syndication has been completed and BDO Unibank Group retained nopart of the loan package for itself or retained a part at the same effective interest rate forthe other participants. Commission and fees arising from negotiating, or participating inthe negotiation of a transaction for a third party – such as the arrangement of theacquisition of shares or other securities or the purchase or sale of businesses – arerecognized at the completion of the underlying transaction. Portfolio and othermanagement advisory and service fees are recognized based on the applicable servicecontracts, usually on a time-proportionate basis. Asset management fees related toinvestment funds are recognized ratably over the period the service is provided. The sameprinciple is applied for wealth management, financial planning and custody services thatare continuously provided over an extended period of time.(c) Trading gain – Trading gain is recognized when the ownership of the securities istransferred to the buyer (at an amount equal to the excess of the selling price over thecarrying amount of securities) and as a result of the mark-to-market valuation of thesecurities at year-end. Only trading gain arising from mark-to-market valuation offinancial assets at FVTPL is recognized in profit or loss by the BDO Unibank Group.(d) Income from assets sold or exchanged – Income from assets sold or exchanged is recognizedwhen the title to the assets is transferred to the buyer or when the collectability of theentire sales price is reasonably assured. This is included as part of Other OperatingIncome account in profit or loss.(e) Dividend income – Dividend income is recognized when BDO Unibank Group’s right toreceive dividend is established.(f) Rental income – Rental income arising from leased properties is accounted for on a straightlinebasis over the lease terms on ongoing leases and is recorded in profit or loss as part ofOther Operating Income.(g) Commissions earned on credit cards – Commissions earned on credit cards are taken up asincome upon receipt from member establishments of charges arising from creditavailments by credit cardholders. These commissions are computed based on certainagreed rates and are deducted from amounts remittable to member establishments.(h) Income on direct financing leases and receivables financed – Income on loans and receivablesfinanced with short-term maturities is recognized using the effective interest method.Interest and finance fees on finance leases on loans and receivables financed withlong-term maturities and the excess of the aggregate lease rental plus the estimatedterminal value of the leased equipment over its cost are credited to unearned discount andamortized over the term of the note or lease using the effective interest method.Unearned income ceases to be amortized when receivables become past due.(i) Real property sales – Revenue is accounted for using the full accrual method. Under thismethod, sale is recognized when the earning process is virtually complete and collectabilityof the entire sales price is reasonably assured.Collections from accounts which did not qualify from revenue recognition are treated ascustomers’ deposit included in accounts payable under Other Liabilities in the statementsof financial position.www.bdo.com.ph 39