2011 Annual Report - BDO

NOTES TOFINANCIAL STATEMENTS(b) Assets Carried at Fair ValueThe Bank assesses at the end of each reporting period whether there is objectiveevidence that a financial asset or a group of financial assets is impaired. In the case ofequity investments classified as available-for-sale, a significant or prolonged decline inthe fair value of security below its cost is considered in determining whether the assetsare impaired. If any such evidence exists for available-for-sale securities, the cumulativeloss – measured as the difference between the acquisition cost and the current fair value,less any impairment loss on that financial asset previously recognized in profit or loss –is reclassified from equity to profit or loss as a reclassification adjustment. Impairmentlosses recognized in profit or loss on equity instruments are not reversed through profit orloss. If, in a subsequent period, the fair value of a debt instrument classified as availablefor sale increases and the increase can be objectively related to an event occurring after theimpairment loss was recognized in profit or loss, the impairment loss is reversed throughprofit or loss.(c) Assets Carried at CostThe Bank assesses at the end of each reporting period whether there is objective evidencethat any of the unquoted equity securities and derivative assets linked to and required tobe settled in such unquoted equity instruments, which are carried at cost may be impaired.The amount of impairment loss is the difference between the carrying amount of theequity security and the present value of the estimated future cash flows discounted at thecurrent market rate of return of a similar asset. Impairment losses on assets carried at costcannot be reversed.2.03.06 Financial LiabilitiesFinancial liabilities include deposit liabilities, bills payable, derivative financial liabilities andother liabilities.Financial liabilities are recognized when the Bank becomes a party to the contractualagreements of the instrument. All interest-related charges are recognized as interest expensein profit or loss.Deposit liabilities and bills payable are recognized initially at fair value, which is the issueproceeds (fair value of consideration received) net of direct issue costs. Borrowings aresubsequently stated at amortized cost; any difference between proceeds net of transactioncosts and the redemption value is recognized in the profit or loss over the period of theborrowings using the effective interest method.