Home' Trinidad and Tobago Guardian : March 26th 2015 Contents Thursday, March 26, 2015 www.guardian.co.tt Guardian
National Infrastructure Development Company Limited
At the end of each reporting period, the entity reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than
its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced
to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Computer software is capitalized at cost. These costs are amortized on a straight-line
basis over a four (4) year period.
Income tax expense represents the sum of the tax charge and deferred taxes.
i Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs
from profits as reported in the statement of profit or loss because it excludes items of
income or expense that are taxable or deductible in other years and it further excludes
items that are not taxable or deductible. The liability for current tax is calculated using
tax rates that have been enacted or substantively enacted by the end of the reporting
ii Deferred tax
Deferred tax is recognised in full, using the liability method on temporary differences
between the carrying amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary differences to the extent
that it is probable that taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit. The
carrying amount of deferred tax assets is reviewed at the end of each reporting period
and reduced to the extent that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the period in which the liability is settled or the asset realised, based on tax
rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the company expects, at the
end of the reporting period, to recover or settle the carrying amount of its assets and
Deferred tax assets and liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the company intends to settle its
current tax assets and liabilities on a net basis.
Provisions are recognised when the company has a present obligation (legal or
constructive) as a result of a past event, it is probable that the company will be required
to settle the obligation, and a reliable estimate can be made of the amount of the
The amount recognised as a provision is the best estimate of the consideration required
to settle the present obligation at the end of the reporting period, taking into account the
risks and uncertainties surrounding the obligation. Where a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the
present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to
be recovered from a third party, a receivable is recognised as an asset if it is virtually
certain that reimbursement will be received and the amount of the receivable can be
Leases of property, plant and equipment where the company assumes substantially all the
benefits and risks of ownership are classified as finance leases. Finance leases are
capitalised at the estimated present value of the underlying lease payments. Each lease
payment is allocated between the liability and finance charges so as to achieve a
constant rate on the finance balance outstanding. The corresponding rental obligations,
net of finance charges, are included in non-current and current liabilities.
The interest element of the finance charge is charged to the statement of profit or loss over
the lease period. The property, plant and equipment acquired under finance leasing
contracts is depreciated over the useful life of the asset.
Leases of assets under which all the risks and benefits of ownership are effectively
retained by the lessors are classified as operating leases. Payments made under
operating leases are charged to the statement of profit or loss on a straight-line basis over
the period of the lease.
When an operating lease is terminated before the lease period has expired, any
payment required to be made to the lessor by way of penalty is recognised as an expense
in the period in which termination takes place.
Other financial liabilities are initially measured at transaction price, net of transaction
costs, and are subsequently measured at amortised cost using the effective interest
method, with interest expense recognised on an effective yield basis. The effective
interest method is a method of calculating the amortised cost of a financial liability and
of allocating interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments through the expected life of the
financial liability, or, where appropriate, a shorter period to the net carrying amount on
Trade and other payables are recognised initially at fair value based on the original
invoice and subsequently measured at amortised cost.
Trade receivables are recognised initially at fair value. A provision for impairment of
trade receivables is established when there is objective evidence that the company will
not be able to collect all amounts due according to the original terms of receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial re organisation, and default or delinquency in payments are
considered indicators that the trade receivable is impaired. The carrying amount of the
asset is reduced through the use of an allowance account, and the amount of loss is
recognised in the statement of income within 'operating expenses'. When a trade
receivable is uncollectible, it is written off against the allowance account for trade
receivables. Subsequent recoveries of amounts previously written off are credited against
operating expenses' in the statement of income. Other receivables are measured at cost
less any impairment.
Where necessary, comparative figures are adjusted to conform to changes in presentation
in the current year.
The preparation of financial statements in conformity with IFRS for SMEs requires management
to make critical judgments and use estimates and assumptions that affect the amounts reported
in the financial statements and related notes to the financial statements. Actual results may
differ from the estimates and assumptions used. Key sources of uncertainty, which requires the
use of estimates, include:
Useful lives and residual values of property, plant and equipment
The estimates of useful lives as translated into depreciation rates are detailed in the property,
plant and equipment policy above. These rates and the residual lives of the assets are reviewed
annually taking cognizance of the forecasted commercial and economic realities and through
benchmarking of accounting treatments within the industry.
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