SEC Form 17-A: Annual Report - the solid group inc website

- 41 -
A reconciliation of the carrying amounts of AFS financial assets is shown below.
Notes 2012 2011
Balance at beginning of year
Disposals
P 59,875,894 P
( 50,636,180) (
150,712,680
60,776,293 )
Reversal (provision) of
impairment loss
during the year
Fair value losses – net
21.1, 21.2
24.3 (
990,643 (
1,153,830 ) (
18,995,887 )
11,064,606 )
Balance at end of year P 9,076,527 P 59,875,894
Investments in foreign currency-denominated bonds were used as collateral for the
interest-bearing loans of BRL (see Note 15).
Investment in equity securities pertains to the Parent Company’s 33% ownership
interest in the common stock of Sony Philippines, Inc. (SPI). The Joint Venture
Agreement (JVA) executed in 1997 with Sony Corporation of Japan covering the
Parent Company’s investment in SPI expired on May 8, 2005 on which the Parent
Company received a formal notice of the expiry of the JVA on April 11, 2005. The
Parent Company and Sony Corporation have both agreed to pursue negotiations for an
equitable settlement of all matters relating to the JVA and its expiration. As a result of
these events, the Parent Company determined that it no longer has significant influence
over the investee company. Consequently, in 2005, the Parent Company reclassified its
remaining investment in shares of stock of SPI with total cost of P8.6 million to
AFS Financial Assets. The Parent Company’s investment in SPI is fully provided with
allowance for impairment loss as of December 31, 2012 and 2011.
Impairment losses recognized on the Group’s AFS Financial Assets are presented
as part of Finance Costs in the 2011 and 2010 consolidated statements of income
(see Note 21.2).
The fair values of the Group’s investments in club shares, which represents proprietary
membership club shares, as of December 31, 2012, 2011 and 2010 have been
determined directly by reference to published prices in active markets (see Note 30).
10. MERCHANDISE INVENTORIES AND SUPPLIES
The details of this account are shown below (see Note 18.1).
2012 2011
Merchandise and finished goods P 406,495,008 P 621,292,896
Raw materials 362,856 362,856
Service parts, supplies and others 26,589,434 46,719,660
433,447,298 668,375,412
Allowance for inventory obsolescence ( 41,584,410) ( 103,832,347 )
Balance at end of year P 391,862,888 P 564,543,065