2011 Annual Report Financial Supplements - BDO

Deferred tax is provided, using the liability method, on temporary differences at the end ofthe reporting period between the tax base of assets and liabilities and their carrying amountsfor financial reporting purposes. Under the liability method, with certain exceptions, deferredtax liabilities are recognized for all taxable temporary differences and deferred tax assets arerecognized for all deductible temporary differences and the carryforward of unused tax lossesand unused tax credits to the extent that it is probable that taxable profit will be availableagainst which the deferred tax asset can be utilized.The carrying amount of deferred tax assets is reviewed at the end of each reporting period andreduced to the extent that it is probable that sufficient taxable profit will be available to allowall or part of the deferred tax asset to be utilized.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply tothe period when the asset is realized or the liability is settled, based on tax rates and tax lawsthat have been enacted or substantively enacted at the end of each reporting period.Most changes in deferred tax assets or liabilities are recognized as a component of tax expensein the statement of income. Only changes in deferred tax assets or liabilities that relate to achange in value of resources or liabilities relate to items recognized in other comprehensiveincome or directly in equity are recognized in other comprehensive income or directly inequity.2.28 Earnings Per Share (EPS)Basic earnings per common share is determined by dividing net profit by the weighted averagenumber of common shares subscribed and issued during the period, after retroactiveadjustment for any stock dividend declared in the current period.The diluted earnings per common share is also computed by dividing net profit by theweighted average number of common shares subscribed and issued during the period.However, net profit attributable to common shares and the weighted average number ofcommon shares outstanding are adjusted to reflect the effects of potentially dilutiveconvertible preferred shares and stock option plan granted by BDO Unibank Group to thequalified officers. Convertible preferred shares are deemed to have been converted tocommon shares at the issuance of preferred shares. The stock option plan is deemed to havebeen converted into common stock in the year the stock option is granted.2.29 Trust ActivitiesBDO Unibank Group commonly acts as trustee and in other fiduciary capacities that result inthe holding or placing of assets on behalf of individuals, trusts, retirement benefit plans andother institutions. Assets and income arising thereon are excluded from these financialstatements, as these are neither assets nor income of BDO Unibank Group.2.30 Event After the Reporting PeriodAny post-year-end event that provides additional information about BDO Unibank Group’sposition at the end of reporting period (adjusting event) is reflected in the financialstatements. Post-year-end events that are not adjusting events, if any, are disclosed whenmaterial to the financial statements.www.bdo.com.ph 47