Home' Trinidad and Tobago Guardian : December 15th 2016 Contents First Citizens Trustee Services Limited
30 September 2016
(Expressed in Trinidad and Tobago dollars)
Summary of significant accounting policies (continued)
e. Impairment of financial assets (continued)
Assets carried at amortised cost (continued)
The amount of the loss is measured as the difference between the asset's carrying amount
and the present value of estimated future cash flows (excluding future credit losses that
have not been incurred) discounted at the financial asset's original effective interest rate. The
carrying amount of the asset is reduced through the use of an allowance account and the
amount of the loss is recognised in the statement of comprehensive income. If a loan has
a variable interest rate, the discount rate for measuring any impairment loss is the current
effective interest rate determined under the contract. As a practical expedient, the Company
may measure impairment on the basis of an instrument's fair value using an observable
market price. If in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was
recognised (such as an improvement in the debtor's credit rating), the amount of the reversal
is recognised in the statement of comprehensive income.
Assets classified as available-for-sale
The Company assesses at each statement of financial position date whether there is objective
evidence that a financial asset or a group of financial assets is impaired. In the case of equity
investments classified as available-for-sale, a significant or prolonged decline in the fair value
of the security below its cost is considered in determining whether the assets are impaired. If
any such evidence exists for available-for-sale financial assets, the cumulative loss -- measured
as the difference between the acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognised in profit or loss -- is removed from equity
and recognised in the statement of comprehensive income. Impairment losses recognised
in the statement of comprehensive income on equity instruments are not reversed through
the statement of comprehensive income. If, in a subsequent period, the fair value of a
debt instrument classified as available-for-sale increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the
impairment loss is reversed through the statement of comprehensive income.
f. 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
Company has substantially all the risk and rewards of ownership are classified as finance
When assets are held subject to a finance lease, an asset and liability is recognised in the
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 statement of comprehensive
income 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.
g. Equipment and motor vehicles
Equipment and motor vehicles are recorded at cost less accumulated depreciation.
Historical cost includes expenditure that is directly attributable to the acquisition of the terms.
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 Company and the cost of the item can be measured reliably.
All other repairs and maintenance are charged to the statement of comprehensive income
during the financial period in which they are incurred.
Depreciation and amortisation are computed on all assets.
The provision for depreciation and amortisation is computed using the straight line method
to allocate their cost to their residual values over their estimated useful lives as follows:
Equipment and furniture
The assets' useful lives are reviewed and adjusted if appropriate at each statement of financial
position date. Assets that are subject to amortisation are reviewed for impairment whenever
events or changes in circumstance 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. Gains and losses on disposal of
equipment and motor vehicles are determined by reference to their carrying amount and are
recognised in the statement of comprehensive income.
h. Income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the
statement of comprehensive income, 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 statement of financial position 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 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 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.
The principal temporary differences arise from depreciation on furniture and equipment and
revaluation of financial assets available-for-sale.
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.
i. Employee benefits
(i) Pension plans
The Company's employees are members of the Group defined benefit plan. A defined
benefit plan defines 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. This pension plan is funded by the payments from employees and the
Company, taking account of the recommendations of independent qualified actuaries.
The Group defined benefit plan operates as a plan that shares risks among subsidiaries
of the Group that are under common control. The Group's policy is to recognise the net
defined benefit cost of the plan in the separate financial statements of First Citizens
Bank Limited, the entity which is legally considered the sponsoring employer for the
plan. The Company recognises a cost equal to its contribution payable for its employees
in its separate financial statements.
(ii) Profit sharing and bonus plans
The Company recognises a liability and an expense for bonuses and profit sharing
based on a formula that takes into consideration the profit attributable to the Group's
shareholders after certain adjustments. The Company recognises a provision where
contractually obliged or where there is a past practice that has created a constructive
j. Fee and commission income
Fees and commissions are recognised on an accrual basis, when the service has been
provided. Fee income collected before the service has been provided is presented as deferred
income on the statement of financial position. Trustee related fees are recognised rateably
over the period the service is provided and accrued in accordance with pre-approved fee
k. Interest income
Interest income is recognised in the statement of comprehensive income for all interest-
bearing instruments on an accrual basis using the effective yield method based on the initial
Dividends that are proposed and declared during the period are accounted for as an
appropriation of retained earnings in the statement of changes in equity.
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