Home' Trinidad and Tobago Guardian : October 21st 2015 Contents B24
The Abercrombie TTD Monthly Fixed Income Fund
30 June 2015
b. 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
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. 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 entity-specific inputs.
d. 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:
(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
(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.
(Expressed in Trinidad and Tobago Dollars)
2 Summary of significant accounting policies (continued)
a. Basis of preparation (continued)
(iii) Standards, amendments and interpretations issued but not yet effective and not early adopted
by the Fund (although relevant to the Fund's operations) (continued)
• Amendment to IAS 1, 'Presentation of financial statements' on the disclosure initiative (effective
from 1 January 2016 and applicable to the Fund from 1 July 2016). These amendments are
part of the IASB's initiative to improve presentation and disclosure in financial reports. These
improvements are not expected to significantly impact the financial statements of the Fund.
• IFRS 9, 'Financial instruments - classification and measurement' (effective from 1 January
2018 and applicable to the Fund from 1 January 2018). This new standard on classification
and measurement of financial assets and financial liabilities will replace the guidance in IAS
39, 'Financial instruments: Recognition and measurement'. IFRS 9 has two measurement
categories: amortised cost and fair value. All equity instruments are measured at fair value.
A debt instrument is measured at amortised cost only if the entity is holding it to collect
contractual cash flows and the cash flows represent principal and interest. For liabilities, the
standard retains most of the IAS 39 requirements. The standard also includes an expected
credit losses model that replaces the current incurred loss impairment model. While the new
standard is expected to significantly impact the Fund's presentation of fair value changes
arising on financial assets available-for-sale and the net asset value of the Fund for fee
calculations, it is not expected to impact the net asset value calculations in relation to the
redemption price per unit.
(iv) Standards, amendments and interpretations issued which are not yet effective and not relevant
to the Fund
• Amendment to IFRS 11, 'Joint arrangements' on acquisition of an interest in a joint operation
(effective annual periods beginning on or after 1 January 2016). This amendment adds
new guidance on how to account for the acquisition of an interest in a joint operation that
constitutes a business. The amendments specify the appropriate accounting treatment for
• Amendments to IAS 16, 'Property, plant and equipment', and IAS 41, 'Agriculture', regarding
bearer plants (effective annual periods beginning on or after 1 January 2016). These
amendments change the financial reporting for bearer plants, such as grape vines, rubber trees
and oil palms. The IASB decided that bearer plants should be accounted for in the same way
as property, plant and equipment because their operation is similar to that of manufacturing.
Consequently, the amendments include them within the scope of IAS 16, instead of IAS 41.
The produce growing on bearer plants will remain within the scope of IAS 41.
• Amendment to IAS 16, 'Property, plant and equipment' and IAS 38,'Intangible assets', on
depreciation and amortisation (effective annual periods beginning on or after 1 January
2016). In this amendment the IASB has clarified that the use of revenue based methods to
calculate the depreciation of an asset is not appropriate because revenue generated by an
activity that includes the use of an asset generally reflects factors other than the consumption
of the economic benefits embodied in the asset. The IASB has also clarified that revenue
is generally presumed to be an inappropriate basis for measuring the consumption of the
economic benefits embodied in an intangible asset.
• IFRS 14 'Regulatory deferral accounts' (effective annual periods beginning on or after 1
January 2016). This standard permits first--time adopters to continue to 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.
• Amendments to IAS 27, 'Separate financial statements' on the equity method (effective
annual periods beginning on or after 1 January 2016). These amendments allow entities to
use the equity method to account for investments in subsidiaries, joint ventures and associates
in their separate financial statements.
• Amendments to IFRS 10, 'Consolidated financial statements' and IAS 28, 'Investments in
associates and joint ventures' (effective annual periods beginning on or after 1 January
2016). These amendments address an inconsistency between the requirements in IFRS 10
and those in IAS 28 in dealing with the sale or contribution of assets between an investor and
its associate or joint venture. The main consequence of the amendments is that a full gain or
loss is recognised when a transaction involves a business (whether it is housed in a subsidiary
or not). A partial gain or loss is recognised when a transaction involves assets that do not
constitute a business, even if these assets are housed in a subsidiary.
• Amendment to IFRS 10 and IAS 28 on investment entities applying the consolidation exception
(effective annual periods beginning on or after 1 January 2016). These amendments clarify
the application of the consolidation exception for investment entities and their subsidiaries.
• IFRS 15 'Revenue from contracts with customers' (effective annual periods beginning on
or after 1 January 2017). This standard is a converged standard from the IASB and FASB
on revenue recognition. The standard will improve the financial reporting of revenue and
improve comparability of the top line in financial statements globally.
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