2009 ANNUAL REPORT FINANCIAL SUPPLEMENTS - BDO

NOTES TO FINANCIAL STATEMENTSDecember 31, 2009, 2008 and 2007(Amounts in Millions of Philippine Pesos, Except Per Share Data or as Indicated)• PAS 27 (Amendment), Consolidated and Separate Financial Statement. When an entityprepares separate financial statements and accounts for investments in subsidiaries, jointlycontrolled entities and associates in accordance with PAS 39 (rather than at cost), suchinvestments will continue to be measured using PAS 39 even if classified as held for sale inaccordance with PFRS 5. Investment measured at cost will continue to be re-measured inaccordance with PFRS 5 when classified as held for sale. This amendment does not havea significant impact on the financial statements of BDO Unibank Group since it does nothave any investments in subsidiaries, jointly controlled entities and associates measuredat fair value in accordance with PAS 39.BDO ANNUAL REPORT 2009• PAS 28, (Amendment), Investments in Associates. Where an investment in associateis accounted for in accordance with PAS 39, only certain rather than all disclosurerequirements in PAS 28 need to be made in addition to disclosures required by PAS 32and PFRS 7. This amendment does not have an impact on the financial statements ofBDO Unibank Group since it does not have any investments in associates measured atfair value in accordance with PAS 39.• PAS 36 (Amendment), Impairment of Assets. Where fair value less cost to sell iscalculated on the basis of discounted cash flows, disclosures equivalent to those forvalue-in-use calculation should be made. Management determined that the adoption ofthis amendment has no significant impact on the financial statements of BDO UnibankGroup.18• PAS 38 (Amendment), Intangible Assets. The amendment clarifies when to recognizea prepayment asset, including advertising or promotional expenditures. In the case ofsupply of goods, the entity recognizes such expenditure as an expense when it has a rightto access the goods. For services, an expense is recognized on receiving the service. Also,prepayment may only be recognized in the event that payment has been made in advanceof obtaining right of access to goods or receipt of services. The current accounting policiesof BDO Unibank Group comply with the foregoing amendment. Hence, the adoptionof this amendment has no material effect on its 2009 financial statements.• PAS 39 (Amendment), Financial Instruments: Recognition and Measurement. The definitionof financial asset or financial liability at fair value through profit or loss as it relates toitems that are held for trading was changed. A financial asset or liability that is part of aportfolio of financial instruments managed together with evidence of an actual pattern ofshort-term profit taking is included in such a portfolio on initial recognition. The currentaccounting practice of BDO Unibank Group complies with this amendment. Hence, theadoption of this amendment has no material effect on its 2009 financial statements.• PAS 40 (Amendment), Investment Property. The amendment requires that property underconstruction or development for future use as investment property shall be includedunder the definition of investment property. This results in such property being withinthe scope of PAS 40 which was previously within the scope of PAS 16. Also, if anentity’s policy is to measure investment property at fair value, but during constructionor development of an investment property the entity is unable to reliably measure itsfair value, then the entity would be permitted to measure the investment property atcost until construction or development is complete. At such time, the entity would beable to measure the investment property at fair value. The adoption of this amendmenthas no significant financial impact to BDO Unibank Group as it has no property underconstruction or development for future use as investment property in 2009.