Home' Trinidad and Tobago Guardian : October 28th 2014 Contents B20
The Abercrombie TTD Monthly Fixed Income Fund
30 June, 2014
(i) significant financial difficulty of the issuer or debtor
(ii) a breach of contract, such as default or delinquency in payments
(iii) it becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganisation
(iv) the disappearance of an active market for that financial asset because of financial difficulties
(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; or
- national or local economic conditions that correlate with defaults on assets in the group
acquisition cost and the current fair value, less any impairment loss on that financial asset previously
If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and
the increase can be objectively related to an event occurring after the impairment loss was recognised in the
income statement, the impairment loss is reversed through the income statement.
2.5 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 other short term investments with original maturities of three months
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.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest
2.7 Net assets attributable to unitholders
The Fund issues one class of units. These are redeemable at the holder's option and are classified as equity
instruments and obligations arising on liquidation'.
Redeemable 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 calculated in accordance with the Fund's regulations.
The units are carried at the redemption amount that is payable at the statement of financial position date
if the holder exercises the right to put the unit back to the Fund. Units are issued and redeemed at the
holder's option at prices based on the Fund's net asset value per unit at the time of issue or redemption.
Should the redeemable units' terms and conditions change such that they do not comply with the strict
criteria contained in the amendment, the redeemable units would be reclassified to a financial liability from
the date the instrument ceases to meet the criteria. The financial liability would be measured at the
instrument's fair value at the date of reclassification. Any difference between the carrying value of the
equity instrument and fair value of the liability on the date of reclassification would be recognised in equity.
2.8 Interest income
Interest income is recognised on a time-proportionate basis using the effective interest method and is
included in the income statement. It includes interest income from cash and cash equivalents and on
financial assets available for sale.
The effective interest method is a method of calculating the amortised cost of a financial asset or financial
liability and of allocating the interest income or interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the
expected life of the financial instrument, or, when appropriate, a shorter period, to the net carrying amount
of the financial asset or financial liability. When calculating the effective interest rate, the Fund estimates
cash flows considering all contractual terms of the financial instrument but does not consider future credit
losses. The calculation includes all fees and points paid or received between parties to the contract that are
an integral part of the effective interest rate, transaction costs and all other premiums or discounts.
2.10 Subscriptions and redemptions
Subscriptions and redemptions are accounted for on the accrual basis.
2.11 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet where there is a
legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis,
or realise the asset and settle the liability simultaneously.
Distributions are accounted for on the accrual basis when declared by the Trustee. These are recognised in
the statement of changes in equity.
(Expressed in Trinidad and Tobago dollars)
2. Summary of Significant Accounting Policies (continued)
2.1 Basis of preparation (continued
(d) Standards, amendments and interpretations issued which are not yet effective and not relevant to the
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.
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.
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.
2.2 Foreign currency transactions
i. Functional and presentation currency
The primary activity of the Fund is to invest in securities denominated in Trinidad and Tobago dollars.
Subscriptions and redemptions of units are denominated in Trinidad and Tobago dollars. The
performance of the Fund is measured and reported to the investors in Trinidad and Tobago dollars.
The Trustee considers the Trinidad and Tobago dollar as the currency that most faithfully represents
the economic effects of the underlying transactions, events and conditions. The financial statements
are presented in Trinidad and Tobago dollars which is the Fund's functional and presentation currency.
ii. 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 income statement.
Changes in the fair value of monetary securities denominated in foreign currency classified as
available for sale are analysed between translation differences resulting from changes in the
amortised cost of the security and other changes in the carrying amount of security. Translation
differences related to changes in the amortised cost are recognised in profit or loss and other changes
in carrying amount are recognised in other comprehensive income. Translation differences on
non-monetary items such as equities classified as available for sale financial assets are included in
other comprehensive income.
2.3 Financial assets available for sale
The Fund classifies its investments as financial assets available for sale. The Trustee determines the
classification of its financial assets at initial recognition. Financial assets available for sale are those
that are 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, exchange rates or equity prices.
All purchases and sales of financial assets available for sale are recognised on the trade date - the date
on which the Fund commits to purchase or sell the financial asset. Financial assets available for sale
are derecognised 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 other comprehensive income, until the financial asset is derecognised or
impaired. When securities classified as available for sale are sold or impaired, the accumulated fair
value adjustments recognised in equity are included in the income statement as 'gains and losses
from investment securities'.
iv. Fair value estimation
The fair values of quoted financial assets traded in active markets are based on quoted market prices
at the close of trading on the reporting date. The quoted market price used for financial assets held
by the Fund is the current bid price. If there is no active market for a financial asset, the Fund
establishes fair value using valuation techniques. These include the use of comparable recent arm's
length transactions, discounted cash flow analysis and other valuation techniques commonly used by
market participants making the maximum use of market inputs and relying as little as possible on
2.4 Impairment of financial assets
The Trustee assesses at each reporting date whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset or group of financial assets that can
be reliably estimated. The criteria that the Trustee uses to determine that there is objective evidence of an
impairment loss include:
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