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

- 21 -Impairment losses on goodwill are not reversed. Negative goodwill, if any, which is theexcess of BDO Unibank Group’s interest in the net fair value of acquired identifiableassets, liabilities and contingent liabilities over cost is recognized directly in profit orloss.For the purpose of impairment testing, goodwill is allocated to cash-generating units orgroups of cash-generating units that are expected to benefit from the businesscombination in which the goodwill arose. The cash-generating units or groups of cashgeneratingunits are identified according to operating segment.Gains and losses on the disposal of an interest in a subsidiary include the carryingamount of goodwill relating to it.If the business combination is achieved in stages, the acquirer is required to remeasureits previously held equity interest in the acquiree at its acquisition-date fair value andrecognize the resulting gain or loss, if any, in the profit or loss or other comprehensiveincome, as appropriate.Any contingent consideration to be transferred by the Group is recognized at fair valueat the acquisition date. Subsequent changes to the fair value of the contingentconsideration that is deemed to be an asset or liability is recognized in accordance withPAS 37 either in profit or loss or as a change to other comprehensive income.Contingent consideration that is classified as equity is not remeasured, and itssubsequent settlement is accounted for within equity.Transfers of assets between commonly-controlled entities are accounted for underhistorical cost accounting.2.14 Intangible AssetsGoodwill represents the excess of the cost of acquisition over the fair value of the netassets acquired and branch licenses at the date of acquisition. Goodwill is classified asintangible asset with indefinite useful life, and thus, not subject to amortization but toan annual test for impairment (see Note 2.24). Goodwill is subsequently carried at costless any accumulated impairment losses.Goodwill is allocated to cash-generating units for the purpose of impairment testing.Each of those cash generating units is represented by each primary reporting segment.Acquired computer software licenses are capitalized on the basis of the costs incurred toacquire and install the specific software. These costs are amortized on straight-line basisover the expected useful life of five years. Costs associated with maintaining computersoftware are expensed as incurred.2.15 Financial LiabilitiesFinancial liabilities include deposit liabilities, bills payable, derivative liabilities,subordinated notes payable and other liabilities.Financial liabilities are recognized when the BDO Unibank Group becomes a party tothe contractual terms of the instrument.