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)Subsidiaries are consolidated from the date BDO Unibank Group obtains control until such time thatsuch control ceases. Except as otherwise indicated, the acquisition of subsidiaries are accounted forusing the purchase method of accounting (see Note 2.12). Purchase method involves the revaluation atfair value of all identifiable assets and liabilities at the acquisition date, regardless of whether or not theywere recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition,the assets and liabilities of the subsidiary are included in the statements of financial position of BDOUnibank Group at their revalued amounts, which are also used as bases for subsequent measurement inaccordance with BDO Unibank Group’s accounting policies.Goodwill (positive) represents the excess of acquisition cost over BDO Unibank Group’s share in thefair value of the identifiable net assets of the acquired subsidiary at acquisition date. Negative goodwillrepresents the excess of BDO Unibank Group’s share in the fair value of identifiable net assets of thesubsidiary at acquisition date over acquisition cost (see Note 2.12).(b)Non-controlling InterestsNon-controlling interests represent the portion of the net assets and profit or loss not attributable toBDO Unibank Group and are presented separately in BDO Unibank Group statements of income andwithin equity in the BDO Unibank Group statements of financial position and changes in equity.BDO Unibank Group applies a policy of treating transactions with non-controlling interests astransactions with parties external to BDO Unibank Group. Disposals of equity investments tonon-controlling interests result in gains and losses for BDO Unibank Group, which are recorded inBDO Unibank Group statement of income. Purchases of equity shares from non-controlling interestsresult in goodwill, being the difference between any consideration paid and the relevant share acquiredin the carrying value of the net assets of the subsidiary.BDO ANNUAL REPORT 200925In BDO Unibank Group financial statements, the non-controlling interest component is shown in BDOUnibank Group statement of changes in equity and in BDO Unibank Group statement of income.2.5 Segment ReportingA business segment is a group of assets and operations engaged in providing products or services that are subjectto risks and returns that are different from those of other business segments. A geographical segment is one thatprovides products or services within a particular economic environment that is subject to risks and returns thatare different from those segments operating in other economic environments.BDO Unibank Group’s operations are organized according to the nature of products and services provided.Financial information on business segments is presented in Note 5.