Home' Trinidad and Tobago Guardian : October 1st 2014 Contents A58
Guardian www.guardian.co.tt Wednesday, October 1, 2014
(a) The Company made enquiries of the Ministry of Community Development for
details on the payables amount, there are no records either from the Ministry or
the Company to substantiate this payable balance, accordingly the amount was
written back to retained earnings.
Reconciliation of loss for the year
Loss for the year under previous IFRS
Loss for the year under IFRS for SME
1.4 Explanation of transition to the IFRS for SMEs
a) Reclassification of deferred government grant
Under IFRS, government grants were recognised when there is reasonable
assurance that the Company will comply with the conditions attaching to them
and that the grants will be received. Government grants were recognised in
profit or loss on a systematic basis over the periods in which the Company
recognises as expenses the related costs for which the grants are intended to
compensate. Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving immediate
financial support to the Company with no future related costs are recognised in
profit or loss in the period in which they become receivable.
On adoption of the IFRS for SMEs government grants are recognized accord-
ing to the nature of the grant as follows:
o A grant that does not impose specified future performance conditions on the
recipient is recognized in income when the grant proceeds are receivable.
o A grant that imposes specified future performance conditions on the recipient
is recognized in income only when the performance conditions are met.
o Grants received before the income recognition criteria are satisfied are
recognized as a liability and released to income when all attached conditions
have been complied with.
Management is of the opinion that all performance conditions have been satis-
fied for the government grants received and therefore has recognized the
deferred government grants in the statement of income and retained earnings.
2. Summary of significant accounting policies
This is the first set of financial statements prepared by Export Centres
Company Limited in accordance with the 'IFRS for Small and Medium-sized
Entities' issued by the International Accounting Standards Board. The principal
accounting policies applied in the preparation of these financial statements are
set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
Basis of preparation
The financial statements of Export Centres Company Limited have been pre-
pared in accordance with the 'International Financial Reporting Standard for
Small and Medium-sized Entities' (IFRS for SMEs). They have been prepared
under the historical cost convention, as modified by the revaluation of invest-
ment property and equity investments at fair value.
The preparation of financial statements in conformity with the IFRS for SMEs
requires the use of certain critical accounting estimates. It also requires man-
agement to exercise its judgment in the process of applying the Company's
accounting policies. Areas involving a higher degree of judgment of complexi-
ty, or areas where assumptions and estimations are significant to the financial
statements are disclosed in note 3.
a) Cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with
banks, and other short-term highly liquid investments with original maturities of
three months or less at the time of purchase, which are subject to an insignifi-
cant risk of changes in value.
Inventories are stated at the lower of cost and net realisable value. Costs of
inventories are determined on a first-in-first-out basis. Net realizable value is
the estimated selling price in the ordinary course of business, less applicable
variable selling, marketing and distribution expenses.
c) Property, Plant and Equipment
Property, plant and equipment is recorded at cost less accumulated deprecia-
tion at rates which are expected to apportion the cost of the assets on a sys-
tematic basis over their estimated useful lives.
Depreciation is charged so as to allocate the cost of assets less their residual
values over their estimated useful lives, using the reducing balance method.
The following annual rates are used for the depreciation of property, plant and
Buildings and improvements
Machinery and equipment
Furniture and office equipment
Property, plant and equipment under construction are recorded as construction
in progress until ready for their intended use; thereafter they are transferred to
the related category of property, plant and equipment and depreciated over
their estimated useful lives.
Repairs and renovations are normally expensed as they are incurred.
Expenses are reported as assets only if the amounts involved are substantial
and one or more of the following conditions is satisfied: the original useful life is
prolonged, the production capacity is increased, the quality of the products is
enhanced materially or production costs are reduced considerably.
Assets held under finance leases are depreciated over their expected useful
lives on the same basis as owned assets or, where shorter, the term of the rel-
The gain or loss arising on the disposal or retirement of an item of property,
plant and equipment is determined as the difference between the sales pro-
ceeds and the carrying amount of the asset and is recognised in the statement
of income and retained earnings.
The carrying amount of property, plant and equipment is reviewed whenever
events or changes in circumstances indicate that impairment may have
d) Revenue Recognition
Revenue comprises the fair value of the consideration received or receivable
for the sale of products in the ordinary course of the Company's activities.
Revenue is shown net of rebates and discounts and after eliminating any sales
within the company.
The Company recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity, the
transfer of ownership, which generally coincides with the time of shipment to
the customer and any other specific criteria have been met for each of the com-
e) Foreign currency transactions
Items included in the financial statements of the company are measured using
the currency that best reflects the economic substance of the underlying events
and the circumstances relevant to the Company (''the functional currency").
These financial statements are presented in Trinidad and Tobago dollars.
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation of monetary assets and liabilities denominated in foreign
currencies are recognised in the statement of income and retained earnings.
Borrowings are initially measured at transaction price (that is the present value
of cash payable to the lender, including transactions costs). Borrowings are
subsequently stated at amortised cost. Interest expense is recognized on the
basis of the effective interest rate method and is included in finance costs.
g) Financial assets
Management determines the classification of its financial assets at initial recognition.
Financial assets - amortised cost
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