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

- 14 -2.06 Financial AssetsFinancial assets include cash and other financial instruments. Financial assets, otherthan those designated and effective as hedging instruments, are classified into thefollowing categories: at FVTPL, loans and receivables, held-to-maturity (HTM) andavailable-for-sale (AFS). Financial assets are assigned to the different categories bymanagement on initial recognition, depending on the purpose for which theinvestments were acquired. Except for derivative financial instruments and financialassets designated at FVTPL, the designation of financial assets is re-evaluated at the endof each reporting period at which date a choice of classification or accounting treatmentis available, subject to compliance with specific provisions of applicable accountingstandards.Regular purchases and sales of financial assets are recognized on their settlement date.All financial assets that are not classified as at FVTPL are initially recognized at fairvalue plus any directly attributable transaction costs. Financial assets carried at FVTPLare initially recorded at fair value and transaction costs related to it are recognized inprofit or loss.The foregoing categories of financial instruments are more fully described below.(a) Financial Assets at Fair Value Through Profit or LossThis category includes derivative financial instruments and financial assets that areeither classified as held for trading (HFT) or are designated by BDO UnibankGroup to be carried at FVTPL upon initial recognition. A financial asset isclassified in this category if acquired principally for the purpose of selling in the nearterm or if so designated by management. Derivatives are also categorized as“held for trading” unless they are designated as hedges.Subsequent to initial recognition, the financial assets included in this category aremeasured at fair value with changes in fair value recognized in profit or loss.Financial assets (except derivatives and financial assets originally designated asfinancial assets at FVTPL) may be subsequently reclassified out of FVTPL category:(i) Only in rare circumstances and if there is a change in intention (i.e., the financialasset is no longer held for the purpose of selling or repurchasing it in the nearfuture);(ii) If the financial asset would have met the definition of loans receivables and ifthe financial asset had not been required to be classified as HFT at initialrecognition and the entity has the intention and ability to hold the financial assetfor the foreseeable future or until maturity; and,(iii) For CLNs and derivatives embedded in CLNs linked to ROP bonds aspermitted by BSP for prudential reporting and by the SEC for financialreporting.