Home' Trinidad and Tobago Guardian : December 18th 2014 Contents C34
First Citizens Bank Limited And Its Subsidiaries
(A Subsidiary of First Citizens Holdings Limited)
Consolidated Financial Statements
30 September, 2014
2 Summary Of Significant Accounting Policies (Continued)
(a) Principles of consolidation
The consolidated financial statements include the accounts of the Bank and its wholly owned
subsidiaries as outlined in Note 1. The financial statements of the consolidated subsidiaries used to
prepare the consolidated financial statements were prepared as of the parent company's reporting
date. The consolidation principles are unchanged as against the previous years.
Inter-company transactions, balances and unrealised gains on transactions between Group
companies are eliminated on consolidation. Unrealised losses are also eliminated unless the
transaction provides evidence of impairment of the asset transferred. The accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
(b) Investment in subsidiaries
Subsidiaries are all entities, (including structured entities) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition
date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-
acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the
recognised amounts of the acquiree's identifiable net assets.
(c) Business combinations and goodwill
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the
acquirer's previously held equity interest in the acquiree is re-measured to fair value at the
acquisition date; any gains or losses arising from such re-measurement are recognised in profit or
Any contingent consideration to be transferred by the Group is recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or
as a change to other comprehensive income. Contingent consideration that is classified as equity
is not re-measured, and its subsequent settlement is accounted for within equity.
The excess of the consideration transferred the amount of any non-controlling interest in the
acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the
fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration
transferred, non-controlling interest recognised and previously held interest measured is less than
the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the
difference is recognised directly in the consolidated income statement.
(d) Transactions and non-controlling interests
Transactions with non-controlling interests that do not result in loss of control are accounted for
as equity transactions -- that is, as transactions with the owners in their capacity as owners. The
difference between fair value of any consideration paid and the relevant share acquired of the
carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
(e) Investment in joint ventures
The Group has applied IFRS 11 to all joint arrangements as of 1 January 2012. Under IFRS 11
investments in joint arrangements are classified as either joint operations or joint ventures depending
on the contractual rights and obligations each investor. The Group has assessed the nature of its joint
arrangements and determined them to be joint ventures. Joint ventures are accounted for using the
Under the equity method of accounting, interests in joint ventures are initially recognised at cost
and adjusted thereafter to recognise the Group's share of the post-acquisition profits or losses and
movements in other comprehensive income. When the Group's share of losses in a joint venture
equals or exceeds its interests in the joint ventures (which includes any long-term interests that,
in substance, form part of the Group's net investment in the joint ventures), the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the joint
(f) Investment in associates
Associates are all entities over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Investments in
associates are accounted for using the equity method of accounting. Under the equity method,
(Expressed in Trinidad and Tobago dollars)
the investment is initially recognised at cost, and the carrying amount is increased or decreased to
recognise the investor's share of the profit or loss of the investee after the date of acquisition. The
Group's investment in associates includes goodwill identified on acquisition.
If the ownership interest in an associate is reduced but significant influence is retained, only
a proportionate share of the amounts previously recognised in other comprehensive income is
reclassified to profit or loss where appropriate.
The Group's share of post-acquisition profit or loss is recognised in the income statement,
and its share of post-acquisition movements in other comprehensive income is recognised in
other comprehensive income with a corresponding adjustment to the carrying amount of the
investment. When the Group's share of losses in an associate equals or exceeds its interest in
the associate, including any other unsecured receivables, the Group does not recognise further
losses, unless it has incurred legal or constructive obligations or made payments on behalf of the
The Group determines at each reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, the Group calculates the amount of
impairment as the difference between the recoverable amount of the associate and its carrying
value and recognises the amount adjacent to 'share of profit/(loss) of associates in the income
Profits and losses resulting from upstream and downstream transactions between the Group and
its associate are recognised in the Group's financial statements only to the extent of unrelated
investor's interests in the associates. Unrealised losses are eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting policies of associates
have been changed where necessary to ensure consistency with the policies adopted by the
Dilution gains and losses arising in investments in associates are recognised in the consolidated
2.3 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using
the currency of the primary economic environment in which the entity operates (the functional
currency). The consolidated financial statements are presented in Trinidad and Tobago dollars,
which is the Group's functional and presentation currency. The exchange rate between the TT
dollar and the US dollar as at the date of these statements was TT$ 6.2986 = US$1.00 (2013 -
TT$6.3506 = US$1.00), which represent the Group's mid-rate.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency at 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 consolidated 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.
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of
a hyper-inflationary economy) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
(a) Assets and liabilities for each balance sheet presented are translated at the closing rate at the
date of that balance sheet;
(b) Income and expenses for each income statement are translated at average exchange rates
(unless this average is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the rate
on the dates of the transactions); and
(c) All resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences
arising are recognised in other comprehensive income.
2.4 Derivative financial instruments
Derivative financial instruments including swaps are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently re-measured at their fair value. The method
of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged.
The carrying values of the interest rate swap, which will vary in response to changes in market conditions,
are recorded as assets or liabilities with the corresponding resultant charge or credit in the consolidated
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