2011 Annual Report - BDO

NOTES TOFINANCIAL STATEMENTSservice has been provided. Commission and fees arising from negotiating, or participating inthe negotiation of, a transaction for a third party – such as the arrangement of the acquisitionof debt instruments or other securities – are recognized on completion of the underlyingtransaction. Other service fees are recognized based on the applicable service contracts,usually on a time-appropriate basis.2.08.03 Trading and Securities GainTrading and securities gain is recognized when the ownership of the security is transferred tothe buyer and is computed as the difference between the selling price and the carrying amountof the security. Trading and securities gain also includes results from the mark-to-marketvaluation of the securities at the end of each reporting period.2.09 LeasesLeases, which do not transfer to the Bank substantially all the risks and benefits of ownershipof the asset are classified as operating leases. Operating lease payments are recognized asexpense in profit or loss on a straight-line basis over the lease term. Associated costs, such asmaintenance and insurance, are expensed as incurred.2.10 Foreign Currency TransactionsThe books of accounts of the Regular Banking Unit (RBU) are maintained in Philippine peso,while those of the FCDU are maintained in United States Dollar (USD).(a) RBUAs at end of each reporting period, foreign currency-denominated monetary assets andliabilities of the RBU are translated in Philippine peso based on the PDS closing rateprevailing at end of the year and foreign currency-denominated income and expenses,at the exchange rate at the PDS weighted average rate (PDSWAR) for the year. Foreignexchange differences arising from restatement of foreign currency-denominated assets andliabilities in the RBU are credited to or charged against current operations in the year inwhich the rates change.Non-monetary items that are measured in terms of historical cost in a foreign currencyare translated using the exchange rates as at the dates of the initial transactions. Nonmonetaryitems measured at fair value in a foreign currency are translated using theexchange rates at the date when the fair value wasdetermined.(b) FCDUAs at end of each reporting period, the assets and liabilities of the Bank’s FCDU are