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)(b)Transactions and BalancesThe accounting records of BDO Unibank Group are maintained in Philippine pesos except for theFCDUs and foreign subsidiaries which are maintained in US dollars or Euro. BDO Remittance, anoverseas branch, and Express Padala HK are maintained in Hong Kong dollars. Foreign currencytransactions during the period are translated into the functional currency at exchange rates whichapproximate those prevailing on transaction dates.Foreign exchange gains and losses resulting from the settlement of such transactions and from thetranslation at period-end exchange rates of monetary assets and liabilities denominated in foreigncurrencies are recognized in profit or loss.(c)Translation of Financial Statements of Foreign Subsidiaries and an Overseas BranchThe operating results and financial position of foreign subsidiaries and an overseas branch, which aremeasured using the US dollar or Euro and Hong Kong dollars, respectively, are translated to Philippinepesos, the BDO Unibank Group’s functional currency as follows:(i)(ii)Assets and liabilities are translated at the closing rate at the end of reporting period;Income and expenses are translated at the monthly average exchange rates (unless this average isnot reasonable approximation of the cumulative effect of the rates prevailing on the transactiondates, in which case income and expenses are translated at the dates of the transactions), exceptfor FCDU which uses the book rate or the previous month-end Philippine Dealing Systemclosing rate in translating income and expenses; and,BDO ANNUAL REPORT 200939(iii)All resulting exchange differences are recognized as a separate component of other comprehensiveincome.On consolidation, exchange differences arising from the translation of the net investment in foreignsubsidiaries and an overseas branch is recognized in other comprehensive income as part of AccumulatedTranslation Adjustment. When a foreign operation is sold, such exchange differences are recognized inprofit or loss as part of the gain or loss on sale.The translation of the financial statements into Philippine peso should not be construed as a representationthat the US dollar, Euro or Hong Kong dollar amounts could be converted into Philippine peso amountsat the translation rates or at any other rates of exchange.