Via ODiSy March 22, 2012 PHILIPPINE STOCK EXCHANGE ... - BDO

- 10 -(v) PFRS 9, Financial Instruments: Classification and Measurement (effective fromJanuary 1, 2015). This is the first part of a new standard on classification andmeasurement of financial assets and financial liabilities that will replace PAS 39in its entirety. This chapter deals with two measurement categories forfinancial assets: amortized cost and fair value. All equity instruments will bemeasured at fair value while debt instruments will be measured at amortizedcost only if the entity is holding it to collect contractual cash flows whichrepresent payment of principal and interest. The accounting for embeddedderivatives in host contracts that are financial assets is simplified by removingthe requirement to consider whether or not they are closely related, and, inmost arrangement, does not require separation from the host contract.For liabilities, the standard retains most of the PAS 39 requirements whichinclude amortized-cost accounting for most financial liabilities, with bifurcationof embedded derivatives. The main change is that, in case where the fair valueoption is taken for financial liabilities, the part of a fair value change due to anentity’s own credit risk is recorded in other comprehensive income rather thanin profit or loss, unless this creates an accounting mismatch.To date, other chapters of PFRS 9 dealing with impairment methodology andhedge accounting are still being completed.BDO Unibank Group does not expect to implement and adopt PFRS 9 untilits effective date or until all chapters of this new standard have been published.In addition, management is currently assessing the impact of PFRS 9 on thefinancial statements of BDO Unibank Group.(vi) PFRS 13, Fair Value Measurement (effective from January 1, 2013). Thisstandard aims to improve consistency and reduce complexity by providing aprecise definition of fair value and a single source of fair value measurementand disclosure requirements for use across PFRS. The requirements do notextend the use of fair value accounting but provide guidance on how it shouldbe applied where its use is already required or permitted by other standards.BDO Unibank Group is yet to assess the impact of this new standard.(vii) Consolidation Standards• PAS 27 (Revised), Separate Financial Statements (effective fromJanuary 1, 2013). This revised standard now covers the requirementspertaining solely to separate financial statements after the relevantdiscussions on control and consolidated financial statements have beentransferred and included in the new PFRS 10. No new major changesrelating to separate financial statements have been introduced as a resultof the revision.• PAS 28 (Revised), Investments in Associate and Joint Venture (effective fromJanuary 1, 2013). This revised standard includes the requirements forjoint ventures, as well as associates, to be accounted for using equitymethod following the issuance of PFRS 11, Joint Arrangement.