Home' Trinidad and Tobago Guardian : October 24th 2014 Contents B19
The Immortelle Income and Growth Fund
30 June, 2014
on that financial asset previously recognised in the Statement of Comprehensive Income -- is removed from
the Investment Re-measurement Reserve and recognised in the Statement of Comprehensive Income.
Impairment losses recognised in the Statement of Comprehensive Income on equity instruments are not
reversed through the Statement of Comprehensive Income. If, in a subsequent period, the fair value of a
debt instrument classified as available-for-sale increased and the increase can be objectively related to an
event occurring after the impairment loss was recognised in the Statement of Comprehensive Income, the
impairment loss is reversed through the Statement of Comprehensive Income.
Objective evidence that a financial assets available-for-sale is impaired includes observable data that comes
to the attention of the Fund about the following loss events:
(i) a significant financial difficulty of the issuer or debtor
(ii) a breach of contract, such as default or delinquency in payment
(iii) it becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganisation
(iv) the disappearance of an active market for the financial asset because of financial difficulties; and
(v) observable data indicating that there is a measurable decrease in the estimated future cash flows
from a group of individual assets since the initial recognition of those assets, although the decrease
cannot yet be identified with the individual financial assets in the group including:
- adverse changes in the payment status of issuers or debtors in the group
- national or local economic conditions that correlate with defaults on assets in the group
(e) Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash and cash equivalents comprise of cash in hand,
deposits held at call with banks and investments in money market instruments, net of bank overdrafts.
Provisions are recognised when the Fund has a present legal or constructive obligation as a result of past
events; it is more likely than not that an outflow of resources will be required to settle the obligation; and
the amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised even
if the likelihood of an outflow with respect to any one item included in the same class of obligations may
(g) Net Assets Attributable to Unit holders
Units are redeemable at the unit holder's option subject to certain restrictions as outlined in Note 1 and are
classified as equity. The distribution on these units is recognised in the Statement of Comprehensive
Income. The units can be put back to the Fund at any time for cash equal to a proportionate share of the
Fund's net asset value as determined under the Trust Deed.
(h) Interest and dividend income
Interest income is recognised in the Statement of Comprehensive Income using the effective interest
method. Dividends on equity instruments are recognised in the Statement of Comprehensive Income when
the Fund's right to receive payment is established.
Expenses are accounted for on the accruals basis.
3. Critical Accounting Estimates and Judgments in Applying Accounting Principles
(a) Impairment Losses on Financial Assets
The Fund reviews its investment portfolios to assess impairment at least on an annual basis. In determining
whether an impairment loss should be recorded in the Statement of Comprehensive Income, the Fund
makes judgements as to whether there is any observable data indicating that there is a measureable
decrease in the estimated future cash flows from investment securities. This evidence may include
observable data indicating that there has been an adverse change in the payment status of borrowers in a
group, or national or local economic conditions that correlate with defaults on assets in the group. The
methodology and assumptions used for estimating both the amount and timing of future cash flows are
reviewed regularly to reduce any difference between loss estimates and actual loss experience.
(b) Fair Value of Financial Assets
The fair values of financial assets that are not quoted in active markets are determined by using valuation
techniques. Where valuation techniques (for example, models) are used to determine fair values, they are
validated and periodically reviewed by qualified personnel independent of the area that created them. To
the extent practical, models use only observable data, however areas such as credit risk (both own and
counterparty), volatilities and correlations require management to make estimates.
4. Cash and Cash Equivalents
Balances with bank
5. Financial Assets Available for Sale
Government debt securities
Corporate debt securities
(Expressed in Trinidad and Tobago dollars)
2. Summary of Significant Accounting Policies (continued)
(iv) Standards, amendments and interpretations issued which are not yet effective and not relevant to the Fund
IAS 19 - Employee benefits, regarding defined benefit plans -- Amendment (effective for annual
periods beginning on or after 1 July 2014). These narrow scope amendments apply to contributions
from employees or third parties to defined benefit plans. The objective of the amendments is to
simplify the accounting for contributions that are independent of the number of years of employee
service, for example, employee contributions that are calculated according to a fixed percentage of
IFRS 11 -- Joint arrangements on acquisition of an interest in a joint operation -- Amendment (effective
for annual periods beginning on or after 1 January 2016). This amendment adds new guidance on
how to account for the acquisition of an interest in a joint operation that constitutes a business. The
amendments specify the appropriate accounting treatment for such acquisitions in accordance with
that type of joint arrangement.
IAS 16 - Property, plant and equipment and IAS 38, intangible assets, on depreciation and
amortisation -- Amendment (effective for annual periods beginning on or after 1 January 2016). In
this amendment the IASB has clarified that the use of revenue based methods to calculate the
depreciation of an asset is not appropriate because revenue generated by an activity that includes the
use of an asset generally reflects factors other than the consumption of the economic benefits
embodied in the asset. The IASB has also clarified that revenue is generally presumed to be an
inappropriate basis for measuring the consumption of the economic benefits embodied in an
IFRS 14 - Regulatory deferral accounts -- (effective for annual periods beginning on or after 1 January
2016). IFRS 14, 'Regulatory deferral accounts' permits first--time adopters to continue to recognise
amounts related to rate regulation in accordance with their previous GAAP requirements when they
adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not
recognise such amounts, the standard requires that the effect of rate regulation must be presented
separately from other items.
IFRS 9 - Financial instruments, regarding general hedge accounting -- Amendments (effective for
annual periods beginning on or after 1 January 2018). These amendments to IFRS 9, 'Financial
instruments', bring into effect a substantial overhaul of hedge accounting that will allow entities to
better reflect their risk management activities in the financial statements.
IFRIC 21 -- Levies -- (effective for annual periods beginning on or after 1 January 2014). This
interpretation is on IAS 37, 'Provisions, contingent liabilities and contingent assets'. IAS 37 sets out
criteria for the recognition of a liability, one of which is the requirement for the entity to have a
present obligation as a result of a past event (known as an obligating event). The interpretation
clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in
the relevant legislation that triggers the payment of the levy.
(b) Foreign currency transactions
Functional and presentation currency
The financial statements are presented in Trinidad and Tobago dollars which is the Fund's functional and
Transactions and balances
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 at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
(c) Financial assets available-for-sale
The Fund classifies its financial assets as available-for-sale. Management determines the classification of its
financial assets at initial recognition. Financial assets intended to be held for an indefinite period of time,
which may be sold in response to needs for liquidity or changes in interest rates, are classified as
All purchases and sales of financial assets available-for-sale are recognised on the trade date, that is, the
date on which the Fund commits to purchase or sell the financial asset. Financial assets available-for-sale
are de-recognised when the rights to receive cash flows from the financial assets have expired or the Fund
has transferred substantially all risks and rewards of ownership.
Financial assets available-for-sale are initially recognised at fair value plus transaction costs. Subsequent to
initial recognition, financial assets available-for-sale are carried at fair value. Gains and losses arising from
changes in the fair value of financial assets available-for-sale are recognised directly in the Investment
Re-measurement Reserve, until the financial asset is de-recognised or impaired. At this time, the cumulative
gain or loss previously recognised in the Investment Re-measurement Reserve is recognised in the
Statement of Comprehensive Income.
Fair value estimation
The fair values of quoted financial assets in active markets are based on current bid prices. If there is no
active market for a financial asset, the Fund establishes fair value using valuation techniques. These include
the use of recent arm's length transactions, discounted cash flow analysis, option pricing models and other
valuation techniques commonly used by market participants.
(d) Impairment of financial assets
The Fund assesses at each Statement of Net Assets date whether there is objective evidence that a financial
asset is impaired. In the case of equity financial assets classified as available-for-sale, a significant or
prolonged decline in the fair value of the security below its cost is considered in determining whether the
assets are impaired. If any such evidence exists for financial assets available-for-sale, the cumulative loss --
measured as the difference between the acquisition cost and the current fair value, less any impairment loss
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