Home' Trinidad and Tobago Guardian : December 23rd 2014 Contents First Citizens Bank Limited
(A Subsidiary of First Citizens Holdings Limited)
Unconsolidated Financial Statements
30 September, 2014
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
Bank and the cost of the item can be measured reliably. All other repairs and maintenance are charged to
the unconsolidated 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 unconsolidated 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
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 earnings.
2.13 Income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the 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 equity,
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 unconsolidated 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.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in
subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of
the reversal of the temporary difference is controlled by the Bank and it is probable that the temporary
difference will not reverse in the foreseeable future. Generally the Bank is unable to control the reversal of
the temporary difference for associates. Only where there is an agreement in place that gives the Bank the
ability to control the reversal of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in
subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary
difference will reverse in the future and there is sufficient taxable profit available against which the
temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a net basis.
2.14 Employee benefits
(a) Pension plans
The Bank operates a defined benefit plan, which is a pension plan that defines an amount of pension
benefits that an employee will receive on retirement, usually dependent on one or more factors, such
as age, years of service and compensation. This pension plan is funded by payments from employees
and by the Bank, taking account of the recommendations of independent qualified actuaries.
(Expressed in Trinidad and Tobago dollars)
2 Summary Of Significant Accounting Policies (continued)
2.12 Property, plant and equipment (continued)
Typically defined benefit plans define an amount of pension benefit that an employee will receive on
retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present
value of the defined benefit obligation at the end of the reporting period less the fair value of plan
assets. The defined benefit obligation is calculated annually by independent actuaries using the
projected unit credit method. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of high-quality corporate bonds
that are denominated in the currency in which the benefits will be paid, and that have terms to
maturity approximating to the terms of the related pension obligation. In countries where there is no
deep market in such bonds, the market rates on government bonds are used.
(b) Profit sharing and bonus plans
The Bank recognises a liability and an expense for bonuses and profit-sharing, based on a formula that
takes into consideration the profit attributable to the Bank's shareholders after certain adjustments.
The Bank recognises a provision where contractually obliged or where there is a past practice that has
created a constructive obligation.
2.15 Cash and cash equivalents
For purposes of the statement of cash flows, cash and cash equivalents comprise of cash balances on hand,
deposits with other banks and short-term highly liquid investments with original maturities of three months
or less when purchased net of balances "due to other banks".
2.16 Interest income and expense
Interest income and interest expense are recognised in the unconsolidated income statement for all interest
bearing instruments on an accrual basis using the effective interest method based on the actual purchase
price. Interest income includes coupons earned on fixed income investments, loans and accrued discount
and premium on treasury bills and other discounted instruments. When loans become doubtful of
collection, they are written down to their recoverable amounts.
The effective interest method is a method of calculating the amortised cost of a financial asset or a 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 through 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 Bank estimates
cash flows considering all contractual terms of the financial instrument (for example, prepayment options),
but does not consider future credit losses. The calculation includes all fees 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.
Once a financial asset or a group of similar financial assets has been written down as a result of an
impairment loss, interest income is recognised using the rate of interest used to discount the future cash
flows for the purpose of measuring the impairment loss.
2.17 Fee and commission income
Fees and commissions are recognised on an accrual basis, when the service has been provided. Loan
commitment fees for loans that are likely to be drawn down are deferred (together with related direct cost)
and recognised as an adjustment to the effective interest rate on the loan. Loan syndication fees are
recognised as revenue when the syndication has been completed and the Bank has retained no part of the
loan package for itself or has retained part at the same effective interest rate as the other participants.
Commissions and fees arising from negotiating or participating in the negotiation of a transaction for a
third party, such as the arrangement of the acquisition of shares or other securities or the purchase or sale
of businesses are recognised on completion of the underlying transaction. Portfolio and other management
advisory and service fees are recognised based on the applicable service contracts usually on a time
Asset management fees related to investment funds are recognised rateably over the period the service is
provided and accrued in accordance with pre-approved fee scales. The same principle is applied for wealth
management, financial planning and custody services that are continuously provided over an extended
period of time. Performance linked fees or fee components are recognised when the performance criteria
2.18 Dividend income
Dividends are recognised in the unconsolidated income statement when the entity's right to receive
payment is established.
2.19 Computer software
Costs associated with maintaining computer software programmes are recognised as an expense when
incurred. However, expenditure that enhances or extends the benefits of computer software programmes
beyond their original specifications and lives is recognised as a capital improvement and added to the
original cost of the software. Computer software development costs recognised as assets are amortised
using the straight-line method over their useful lives but not exceeding a period of three years.
Borrowings are recognised initially at fair value, being their issue proceeds net of transaction costs incurred.
Subsequently, borrowings are stated at amortised cost and any difference between proceeds net of
transactions costs and the redemption value is recognised in the unconsolidated income statement over the
period of the borrowings using the effective interest method.
Acceptances comprise undertakings by the Bank to pay bills of exchange drawn on customers. The Bank
expects most acceptances to be settled simultaneously with the reimbursement from the customers.
Acceptances are accounted for as off-balance sheet transactions and are disclosed as contingent liabilities
2.22 Dividend distribution
Dividends on ordinary shares are recognised in equity in the period in which they are approved by the
Company's shareholders. Dividends for the year, which are declared after the year end, are disclosed in the
subsequent events note when applicable.
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