2005 - Asianbanks.net

3.2 Expense recognition
(a)
(b)
(c)
Interest expenses
Interest expenses are charged to earnings on an accrual basis. Interest on notes payable included in the face value is recorded
as deferred interest and amortized to expenses on a straight-line method over the period of notes payables.
Life premium reserve
Life premium reserve represents the reserve for liability accumulated from the commencement date up to the balance sheet
date, for all life insurance policies in force. The reserve is calculated in accordance with the actuarial method prescribed by the
Regulation on Life Insurance Policy Reserve as promulgated by the Ministry of Commerce on 23 November 2001.
- Reserve for life insurance policies with over-1-year period is determined using the mean reserve method.
- At least 40 percent of net premium written or full amount of unearned premium reserve is set aside for life insurance
policies with less than or equal to 1-year period, accident insurance policies, health insurance policies, or other insurance
policies.
Benefits payment in accordance with life insurance policies
Benefits payment is recorded when notification of claim is received or when due under policies.
3.3 Investments
Investments in securities held for trading are presented at fair value. Unrealized gains or losses arising from changes in the value of
such securities are included in determining earnings.
Investments in available-for-sales securities, both held as short-term and long-term investments, are presented at fair value. Changes
in the value of such securities are shown as a separate item in shareholders’ equity until the securities are sold, when the changes are then
included in determining earnings.
Investments in debt securities, classified as short-term or long-term investments by remaining period to maturity, which are
expected to be held to maturity are presented at amortized costs less allowance for impairment loss (if any). Premiums/discounts on
debt securities are amortized based on the effective yield rates. The amortized amount is presented as an adjustment to the interest
income.
Investments in non-marketable equity securities which are classified as general investments are valued at cost less allowance for
impairment loss (if any).
Purchases and sales of investments are recognized on the trade dates except for the Bank’s investments in debt securities, which are
recognized on the settlement dates.
Losses on impairment of investments are included in determining earnings.
In cases where there is reclassification of investment type, the investments are presented at their fair value prevailing on the
reclassification dates. Differences between the carrying amount of the investments and their fair value on those dates are included in
determining earnings or recorded as revaluation surplus (deficit) on investments and presented as a separate item in shareholders’ equity
to be amortized over the remaining periods to maturity of the debt securities, as the case may be.
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