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

- 25 -(d) Income from assets sold or exchanged – Income from assets sold or exchanged isrecognized when the title to the assets is transferred to the buyer or when thecollectability of the entire sales price is reasonably assured. This is included as partof Other Operating Income account in profit or loss.(e) Dividend income – Dividend income is recognized when BDO Unibank Group’s rightto receive dividend is established.(f) Rental income – Rental income arising from leased properties is accounted for on astraight-line basis over the lease terms on ongoing leases and is recorded in profit orloss as part of Other Operating Income.(g) Commissions earned on credit cards – Commissions earned on credit cards are taken upas income upon receipt from member establishments of charges arising from creditavailments by credit cardholders. These commissions are computed based oncertain agreed rates and are deducted from amounts remittable to memberestablishments.(h) Income on direct financing leases and receivables financed – Income on loans and receivablesfinanced with short-term maturities is recognized using the effective interestmethod. Interest and finance fees on finance leases on loans and receivablesfinanced with long-term maturities and the excess of the aggregate lease rental plusthe estimated terminal value of the leased equipment over its cost are credited tounearned discount and amortized over the term of the note or lease using theeffective interest method. Unearned income ceases to be amortized whenreceivables become past due.(i) Real property sales – Revenue is accounted for using the full accrual method. Underthis method, sale is recognized when the earning process is virtually complete andcollectability of the entire sales price is reasonably assured.Collections from accounts which did not qualify from revenue recognition aretreated as customers’ deposit included in accounts payable under Other Liabilities inthe statements of financial position.The BDO Unibank Group records its revenue at gross and separately recognizes anexpense and liability relative to the fair value of the reward points earned by clients andcustomers (see Note 3.02) since such points are redeemable significantly from the goodsor services provided by a third party participating in the program, for example, SMGroup (a related party) and rewards partners of the Bank.Cost and expenses are recognized in profit or loss upon utilization of the assets orservices or at the date these are incurred.2.21 Provisions and ContingenciesProvisions are recognized when present obligations will probably lead to an outflow ofeconomic resources and these can be estimated reliably even if the timing or amount ofthe outflow may still be uncertain. A present obligation arises from the presence of a legalor constructive commitment that has resulted from past events, for example, legaldisputes or onerous contracts.