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

- 36 -3.02 Key Sources of Estimation UncertaintyThe following are the key assumptions concerning the future, and other key sources ofestimation uncertainty at the end of the reporting period, that have a significant risk ofcausing a material adjustment to the carrying amounts of resources and liabilities withinthe next financial year:(a) Impairment Losses on Financial Assets (AFS Securities, HTM Investments and Loans andReceivables)BDO Unibank Group reviews its AFS, HTM and loans and receivables portfoliosto assess impairment at least on a quarterly basis. In determining whether animpairment loss should be recorded in profit or loss, BDO Unibank Group makesjudgments as to whether there is any observable data indicating that there is ameasurable decrease in the estimated future cash flows from the financial asset or aportfolio of similar financial assets. This evidence may include observable dataindicating that there has been an adverse change in the payment status of borrowersor issuers in a group, or national or local economic conditions that correlate withdefaults on assets in the group. Management uses estimates based on historical lossexperience for assets with credit risk characteristics and objective evidence ofimpairment similar to those in the portfolio when scheduling its future cash flows.The methodology and assumptions used for estimating both the amount and timingof future cash flows are reviewed regularly to reduce any differences between lossestimates and actual loss experience.BDO Unibank Group carries certain financial assets at fair value, which requires theextensive use of accounting estimates and judgment. Significant components of fairvalue measurement are determined using verifiable objective evidence such asforeign exchange rates, interest rates and volatility rates. However, the amount ofchanges in fair value would differ if BDO Unibank Group had utilized differentvaluation methods and assumptions. Any change in fair value of these financialassets and liabilities would affect profit or loss and other comprehensive income.For the total impairment losses on financial assets recognized in profit or loss, seeNote 14.(b) Fair Value of Financial Assets and LiabilitiesAs at December 31, the following table summarizes the carrying amounts and fairvalues of those financial resources and liabilities not presented in the statements offinancial position at their fair value.December 31, 2011BDO Unibank Group Parent BankCost Fair Value Cost Fair ValueFinancial Assets:Due from other banks and BSP P 149,613 P 149,655 P 138,769 P 138,811AFS securities – unquoted 570 * 310 *HTM investments 93,670 106,032 85,742 97,761Loans and other receivables 673,927 680,546 653,857 663,057Other resources 2,427 2,427 2,318 2,318