MORNBFI Vol. 1 - Planters Development Bank

APP. Q-2011.12.31(a) HTM, (b) Securities at Fair Value throughProfit or Loss, or (c) Investment in Non-Marketable Equity Securities (INMES).c.1 ASS shall be measured upon initialrecognition at their fair value plustransaction costs that are directlyattributable to the acquisition of thesecurities. After initial recognition, an FIshall measure ASS at their fair values,without any deduction for transaction costsit may incur on sale or other disposal.A gain or loss arising from a change in thefair value of an ASS shall be recognizeddirectly in equity under the account “NetUnrealized Gains/(Losses) on SecuritiesAvailable-for-Sale” and reflected in thestatement of changes in equity, except forimpairment losses and FX gains and losses,until the security is derecognized, at whichtime the cumulative gain or loss previouslyrecognized in equity shall be recognizedin profit or loss. However, interestcalculated using the effective interestmethod is recognized in profit or loss.Dividends on an Available- for- Sale equitysecurity are recognized in profit or losswhen the FI’s right to receive payment isestablished.For the purpose of recognizing foreignexchange gains and losses on a monetaryASS that is denominated in a foreigncurrency, it shall be treated as if it werecarried at amortized cost in the foreigncurrency. Accordingly, for such an ASS,exchange differences resulting from changesin amortized cost are recognized in profitor loss and other changes in carryingamount are recognized directly in equity.For ASS that are not monetary items (forexample, equity instruments), the gain orloss that is recognized directly in equityincludes any related foreign exchangecomponent.An FI shall assess at each time itprepares its financial statements whetherthere is any objective evidence that an ASSis impaired.When a decline in the fair value of anASS has been recognized directly in equityand there is objective evidence that the assetis impaired, the cumulative loss that hadbeen recognized directly in equity shall beremoved from equity and recognized inprofit or loss even though the security hasnot been derecognized.The amount of the cumulative loss thatis removed from equity and recognized inprofit or loss shall be the difference betweenthe acquisition cost (net of any principalrepayment and amortization) and currentfair value, less any impairment loss on thatsecurity previously recognized in profit orloss.Impairment losses recognized in profitor loss for an investment in an equityinstrument classified as Available-for-Saleshall not be reversed through profit or loss.If, in a subsequent period, the fair valueof a debt instrument classified as Availablefor-Saleincreases and the increase can beobjectively related to an event occurringafter the impairment loss was recognizedin profit or loss, the impairment loss shallbe reversed, with the amount of thereversal recognized in profit or loss.c.2. Underwriting Accounts (UA) shallbe a sub-account under Available-for-Sale.These are debt and equity securitiespurchased which have remained unsold/locked-in from underwriting ventures ona firm basis. UA account is applicable onlyto UBs and IHs.d. INMES - These are equityinstruments that do not have a quotedmarket price in an active market, and whosefair value cannot be reliably measured.INMES shall be measured upon initialrecognition at its fair value plus transactioncosts that are directly attributable to theacquisition of the security. After initialManual of Regulations for Non-Bank Financial InstitutionsQ RegulationsAppendix Q-20 - Page 5