Home' Trinidad and Tobago Guardian : December 18th 2014 Contents C36
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)
2.6 Impairment of financial assets (continued)
(b) Assets classified as available-for-sale
The Group assesses at the year end whether there is objective evidence that a financial asset or a
group of financial assets is impaired. In the case of equity investments 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 available-for-sale
financial assets, the cumulative loss -- measured as the difference between the acquisition cost
and the current fair value, less any impairment loss on that financial asset previously recognised
in profit or loss -- is removed from equity and recognised in the consolidated income statement.
Impairment losses recognised in the consolidated income statement on equity instruments are not
reversed through the consolidated income statement.
Debt securities are evaluated based on the criteria in Note 2.6 (a). 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 profit or loss,
the impairment loss is reversed through the consolidated income statement.
(c) Renegotiated loans
Loans that are either subject to collective impairment assessment or individually significant and
whose terms have been negotiated are no longer considered to be past due but are treated
as new loans. In subsequent years the asset is considered to be past due and disclosed only if
2.7 Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cashflows (cash-generating units). Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of the impairment at each reporting date.
2.8 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the consolidated statement of
financial position 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.
2.9 Sale and repurchase agreements and lending of securities
Securities sold subject to sale and repurchase agreements (repos) are retained on the consolidated
statement of financial position as investment securities and the counterparty liability is included in other
Securities purchased under agreements to resell (reverse repos) are recorded as loans to other banks or
customers as appropriate.
The difference between sale and repurchase price is treated as interest and accrued over the life of the
repo agreement using the effective interest method.
2.10 Lease transactions
Leases are accounted for in accordance with IAS 17 and IFRIC 4. They are divided into finance leases and
Leases in which a significant portion of the risks and methods of ownership are retained by another party,
the lessor, are classified as operating leases. Leases of assets where the Group has substantially all the risk
and rewards of ownership are classified as finance leases.
(a) The Group as the lessee
The Group has entered into operating leases where the total payments made under operating
leases are charged to the consolidated income statement on a straight-line basis over the period
of the lease. When an operating lease is terminated before the period has expired, any penalty
payment made to the lessor is recognised as an expense in the period in which termination takes
When assets are held subject to a finance lease, an asset and liability is recognised in the
consolidated statement of financial position at amounts equal at inception to the fair value of the
leased asset or, if lower, the present value of the minimum lease payments. Lease payments are
apportioned between the finance charge and the outstanding liability so as to achieve a constant
rate on the finance balance outstanding.
The interest element of the finance cost is charged to the consolidated income statement over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of
the liability for each period. The plant and equipment acquired under finance leases is depreciated
over the shorter of the useful life of the asset and the lease term.
(Expressed in Trinidad and Tobago dollars)
(b) The Group as the lessor
When assets are held subject to a finance lease, the present value of the lease payments is
recognised as a receivable. The difference between the gross receivable and the present value of
the receivable is recognised as unearned finance income. Lease income is recognised over the term
of the lease using the net investment method (before tax), which reflects a constant periodic rate
of return on the remaining balance of the liability for each period.
2.11 Property, plant and equipment
Freehold premises are shown at fair value based on assessments performed by management or by
independent valuators every three years, less subsequent depreciation for buildings. Valuations are
performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ
materially from its carrying amount. Any accumulated depreciation at the date of revaluation is eliminated
against the gross carrying amount of the assets and the net amount is restated to the revalued amount
of the asset.
All other property, plant and equipment are stated at historical cost less depreciation. The valuation of
freehold premises is reviewed annually to ensure it approximately equates to fair value. The valuations of
freehold premises are re-assessed when circumstances indicate there may be a material change in value.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to the consolidated income statement during the financial period in which they are incurred.
Increases in the carrying amount arising on revaluation of freehold premises are credited to fair value
reserves in shareholders' equity. Decreases that affect previous increases of the same assets are charged
against fair value reserves directly in equity; all other decreases are charged to the consolidated income
statement. Any accumulated depreciation at the date of revaluation is eliminated against the gross
carrying amount of the asset, and the net amount is restated to the revalued amount of the asset.
Leasehold improvements and equipment are recorded at cost less accumulated depreciation.
Depreciation and amortisation are computed on all assets except land.
The provision for depreciation and amortisation is computed using the straight line method to allocate
their cost or revalued amounts to their residual values over their estimated useful lives, as follows:-
Equipment and furniture
Computer equipment and motor vehicles 3 - 5 years
Amortised over the life of the lease
The assets' useful lives are reviewed and adjusted if appropriate at each reporting date. Assets that
are subject to amortisation are reviewed for impairment whenever events or changes in circumstances
indicate the carrying amount may not be recoverable.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written
down immediately to its recoverable amount. The recoverable amount is the higher of the assets fair
value less cost to sell and value in use. Gains and losses on disposal of property, plant and equipment
are determined by reference to their carrying amount and are recognised within the income statement.
When revalued assets are sold, the amounts included in fair value reserves are transferred to retained
2.12 Income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated
income statement, except to the extent that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted
at the balance sheet date in the countries where the company and its subsidiaries operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income
tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the balance sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit
will be available against which the temporary differences can be utilised.
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