Home' Trinidad and Tobago Guardian : December 21st 2015 Contents Monday, December 21, 2015 www.guardian.co.tt Guardian
First Citizens Bank Limited and its Subsidiaries
(A Subsidiary of First Citizens Holdings Limited)
Consolidated Financial Statements
30 September 2015
Summary of significant accounting policies (continued)
h. 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
i. 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 funding instruments.
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.
j. Lease transactions
Leases are accounted for in accordance with IAS 17 and IFRIC 4. They are divided into finance
leases and operating leases.
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.
(i) 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 place.
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.
(ii) 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 asset for each period.
k. 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.
Notes to the Consolidated Financial Statements (continued)
(Expressed in Trinidad and Tobago dollars)
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
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 consolidated income statement. When revalued assets are sold, the amounts included in fair
value reserves are transferred to retained earnings.
l. 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 equity, respectively.
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 Bank 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
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 Group and
it is probable that the temporary difference will not reverse in the foreseeable future. Generally
the Group is unable to control the reversal of the temporary difference for associates. Only where
there is an agreement in place that gives the Group 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 foreseeable 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
m. Employee benefits
(i) Pension plans
The Group 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 Group, taking account of the recommendations of
independent qualified actuaries.
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
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