2011 Annual Report - BDO

and any resulting impairment loss could have a material adverse effect on the results ofoperations.No impairment losses on non-financial assets were recognized in 2011 and 2010.(g) Post-employment and Other BenefitsThe determination of the Bank’s obligation and cost of pension and other retirementbenefits is dependent on the selection of certain assumptions used by actuaries incalculating such amounts. Those assumptions are described in Note 19 and include,among others, discount rates, expected return on plan assets and salary increase rates. Inaccordance with PFRS, actual results that differ from the assumptions are accumulated andamortized over future periods and therefore, generally affect the recognized expense andrecorded obligation in such future periods.The amounts of defined benefit liability and net unrecognized actuarial losses arepresented in Note 19.4. CASH AND CASH EQUIVALENTS4.0l Due from BSPThis account is composed of the following:2011 2010Mandatory reserves P 2,588,351,562 P 2,051,950,068Other than mandatory reserves 4,504,544,270 5,003,666,650P 7,092,895,832 P 7,055,616,718Mandatory reserves represent the balance of the deposit account maintained with the BSP tomeet reserve requirements and to serve as clearing account for interbank claims.Due from BSP bears annual effective interest rates ranging from 0.5% to 4.0% in 2011 andfrom 0.5% to 4.1% in 2010, except for the amounts within the required reserve as determinedby BSP. Total interest income earned amounted to P78,124,475 and P39,807,069 in 2011 and2010, respectively, and is included as part of Interest Income on Due from Other Banks in thestatements of income.Cash and balances with the BSP are included in cash and cash equivalents for cash flowstatement reporting purposes.Under Section 254 of the Manual of Regulations for Banks (MORB), a bank is required tomaintain at least 25 percent of its reserve requirements in the form of deposits with theBSP as among the allowable instruments for reserve cover. Section 254.1 of the MORBwww.bdo.com.ph 79