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BMO Financial Group 186th Annual Report 200388
Notes to Consolidated Financial Statements
(Canadian $ in millions) 2003 2002
Accounts receivable, prepaid expenses and other items $ 4,666 $ 4,295
Accrued interest receivable 636 723
Due from clients, dealers and brokers 3,885 7,645
Pension asset (Note 18) 1,171 1,008
Future income taxes (Note 20) 146 109
Total $ 10,504 $ 13,780
Intangible Assets
Intangible assets related to our acquisitions are recorded at their
fair value at the acquisition date. Intangible assets by category are
as follows:
(Canadian $ in millions) 2003 2002
Accumulated Carrying Carrying
Cost amortization value value
Customer relationships $ 519 $ 145 $ 374 $ 489
Core deposits 173 82 91 126
Branch distribution network 195 94 101 134
Other 33 10 23 24
Total $ 920 $ 331 $ 589 $ 773
Intangible assets with a finite life are amortized to income over the
period during which we believe the assets will benefit us on either
a straight-line or an accelerated basis, depending on the specific
asset purchased, over a period not to exceed 15 years.
We write down intangible assets with a finite life to fair value
when the related undiscounted cash flows are not expected to
allow for recovery of the carrying value. Fair value of intangibles is
determined by discounting the expected related cash flows. There
were no write-downs of intangible assets due to impairment during
the years ended October 31, 2003 and 2002.
Intangible assets with an indefinite life are not subject to amor-
tization; they are tested at least annually for impairment to ensure
that their fair value is greater than or equal to carrying value. Any
excess of carrying value over fair value is charged to income in the
period in which impairment is determined. We had $1 million and
nil of intangible assets with an indefinite life as at October 31, 2003
and 2002, respectively.
The total estimated amortization expense relating to intangible
assets for each of the next five years is $100 million for 2004,
$93 million for 2005, $84 million for 2006, $78 million for 2007
and $66 million for 2008.
Demand deposits are comprised primarily of our customers’
chequing accounts, some of which we pay interest on. Our cus-
tomers need not notify us prior to withdrawing money from
their chequing accounts.
Deposits payable after notice are comprised primarily of our
customers’ savings accounts, on which we pay interest.
Deposits payable on a fixed date are comprised primarily of
various investment instruments purchased by our customers to earn
interest over a fixed period, such as term deposits and guaranteed
investment certificates. The terms of these deposits can vary from
one day to 10 years.
Note 13 Other Assets
Demand deposits
Payable Payable on
(Canadian $ in millions) Interest bearing Non-interest bearing after notice a fixed date Total
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
Deposits by:
Banks $ 299 $ 210 $ 410 $ 363 $ 93 $ 188 $ 23,953 $ 14,512 $ 24,755 $ 15,273
Businesses and governments 5,422 4,659 9,536 9,008 17,288 16,028 40,159 41,716 72,405 71,411
Individuals 2,512 2,450 3,728 3,346 32,641 32,949 35,510 36,409 74,391 75,154
Total $ 8,233 $ 7,319 $ 13,674 $ 12,717 $ 50,022 $ 49,165 $ 99,622 $ 92,637 $ 171,551 $ 161,838
Booked in:
Canada $ 7,442 $ 6,561 $ 10,187 $ 8,941 $ 34,449 $ 32,671 $ 63,656 $ 54,799 $ 115,734 $ 102,972
United States 696 730 3,481 3,766 15,042 16,102 18,732 28,595 37,951 49,193
Other countries 95 28 610 531 392 17,234 9,243 17,866 9,673
Total $ 8,233 $ 7,319 $ 13,674 $ 12,717 $ 50,022 $ 49,165 $ 99,622 $ 92,637 $ 171,551 $ 161,838
Note 14 Deposits
Goodwill associated with our acquisitions during the year ended October 31, 2003 is allocated to our operating groups as illustrated in the
following table: Corporate
Support,
Personal and including
Commercial Private Investment Technology
(Canadian $ in millions) Client Group Client Group Banking Group and Solutions Total
Goodwill at beginning of year $ 455 $ 912 $ 58 $ 3 $ 1,428
Acquisitions during the year
–
58 15
–
73
Effects of foreign exchange and other (51) (116)
––
(167)
Goodwill at end of year $ 404 $ 854 $ 73 $ 3 $ 1,334
There were no write-downs of goodwill due to impairment during the years ended October 31, 2003 and 2002.