Home' Trinidad and Tobago Guardian : December 15th 2016 Contents First Citizens Asset Management Limited
30 September 2016
(Expressed in Trinidad and Tobago dollars)
2 Summary of significant accounting policies (continued)
a. Basis of preparation (continued)
(ii) Standards, amendments and interpretations to existing standards that are not yet effective
and have not been early adopted by the Company (continued)
• IFRS 15, 'Revenue from Contracts with Customers' (effective 1 January 2018). This
standard provides a single, principles based five-step model to be applied to all contracts
with customers. The five steps in the model are as follows:
- Identify the contract with the customer;
- Identify the performance obligations in the contract;
- Determine the transaction price;
- Allocate the transaction price to the performance obligations in the contracts;
- Recognise revenue when (or as) the entity satisfies a performance obligation.
• IFRS 16, 'Leases' (effective 1 January 2019). This standard specifies how an IFRS reporter
will recognise, present and disclose leases. The standard provides a single lessee
accounting model, requiring lessees to recognise assets and liabilities for all leases unless
the lease term in 12 months and less or the underlying assets has a low value. Lessors
continue to classify leases as operating or finance.
• IAS 12 - Income Taxes (Amendment effective 1 January 2017) -- Recognition of Deferred
Tax Assets for Unrealised Losses. This amendment is to clarify the following aspects:
- Unrealised losses on debt instruments measured at fair value and measured at cost for
tax purposes give rise to a deductible temporary difference regardless of whether the
debt instrument's holder expects to recover the carrying amount of the debt instrument
by sale or use.
- The carrying amount of the asset does not limit the estimation of probable future
- Estimates for future taxable profits exclude tax deductions resulting from the reversal
of deductible temporary differences.
- An entity assesses deferred tax assets in combination with other deferred assets. Where
tax law restricts the utlisation of tax losses, an entity would assess deferred tax assets
in combination with other deferred tax assets of the same type.
The Company is in the process of assessing the impact of the new and revised standards not yet
effective on the financial statements.
b. Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary
economic environment in which the entity operates, "the functional currency". These
financial statements are presented in Trinidad and Tobago dollars, which is the Company's
functional and presentation currency. The exchange rate between the TT dollar and the US
dollar as at the date of these statements was TT$6.6553 = US$1.00 (2015: TT$6.2986 =
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency at 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 of monetary
assets and liabilities denominated in foreign currencies are recognised in the statement of
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 the security.
Translation differences relate to changes in the amortised cost are recognised in profit or
loss and other changes in carrying amount are recognised in equity. Translation differences
on non-monetary items such as equities classified as available-for-sale financial assets are
included in other comprehensive income.
c. Cash and due from banks
Cash and due from banks comprise cash balances on hand, deposits with financial institutions
and short-term highly liquid investments with original maturities of three months or less.
d. Financial assets and financial liabilities
(i) Financial assets
The Company classifies its financial assets in the following categories: loans and receivables
and available-for-sale. The classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of its financial assets at
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market, other than:
• Those that the Company intends to sell immediately or in the short-term and those that
the entity upon initial recognition designates at fair value through profit or loss.
• Those that the Company upon initial recognition designates as available-for-sale.
Available-for-sale financial assets
Available-for-sale financial assets are those 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 or that are not classified as loans and receivables, held to
maturity investments or financial assets at fair value through profit or loss.
Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade-date -- the date
on which the Company commits to purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets are derecognised when the rights to receive cash
flows from the investments have expired or have been transferred and the Company has
transferred substantially all risks and rewards of ownership.
Available-for-sale financial assets are subsequently carried at fair value. Loans and receivables
are subsequently carried at amortised cost using the effective interest method.
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 or 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 statement of
comprehensive income as "gains and losses from financial assets available-for-sale".
(ii) Financial liabilities
The Company measures financial liabilities at cost. Financial liabilities include creditors and
accrued expenses. Financial liabilities are derecognised when they have been redeemed or
(iii) Determination of fair value
For financial instruments traded in an active market, the determination of fair values of
financial assets and liabilities is based on quoted market prices or dealer price quotations.
A financial instrument is regarded as quoted in an active market if quoted prices are readily
and regularly available from an exchange, dealer, broker, industry group, pricing service
or regulatory agency, and these prices represent actual and regular occurring market
transactions on an arm's length basis. If the above criteria are not met, the market is
regarded as being inactive. Indicators that a market is inactive are when there is a wide
bid-offer spread or significant increase in the bid-offer spread or there are few recent
For all other financial instruments, fair value is determined using valuation techniques.
In these techniques, fair values are estimated from observable data in respect of similar
financial instruments, using models to estimate the present value of expected future cash
flows or other valuation techniques using input existing at the year end.
The Company uses an internally developed model which is generally consistent with other
valuation models used in the industry. Valuation models are used to value unlisted debt
securities and other debt securities for which the market has become or is illiquid. Some
of the inputs of this model may not be market observable and are therefore based on
e. Impairment of financial assets
Assets carried at amortised cost
The Company 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.
Evidence of impairment may include indications that the debtors or a group of debtors is
experiencing significant financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other financial re-organisation, and
where observable data indicate that there is a measurable decrease in the estimated future cash
flows, such as changes in arrears or economic conditions that correlate with defaults.
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