Home' Trinidad and Tobago Guardian : December 28th 2016 Contents 4
First Citizens Holdings Limited And Its Subsidiaries
Consolidated Financial Statements
30 September 2016
(Expressed in Trinidad and Tobago dollars)
2 Summary of significant accounting policies (continued)
a. Basis of preparation (continued)
(i) Standards, amendment and interpretations which are effective and have been adopted by the
Group in the current period:
• IAS 19 -- Amendment to IAS 19,'Employee benefits', regarding defined benefit plans
(effective annual periods on or after 1 July 2014 although endorsed for annual periods on
or after 1 February 2015) - These narrow scope amendments apply to contributions from
employees or third parties to defined benefit plans. The objective of the amendments is to
simplify the accounting for contributions that are independent of the number of years of
employee service, for example, employee contributions that are calculated according to a
fixed percentage of salary.
• Annual improvements 2012 (effective annual periods on or after 1 July 2014 although
endorsed for annual periods on or after 1 February 2015) - These amendments include
changes from the 2010-12 cycle of the annual improvements project, that affect 7
- IFRS 2, 'Share-based payment'
- IFRS 3, 'Business Combinations'
- IFRS 8, 'Operating segments'
- IFRS 13, 'Fair value measurement'
- IAS 16, 'Property, plant and equipment' and IAS 38, 'Intangible assets'
- Consequential amendments to IFRS 9,'Financial instruments', IAS 37,'Provisions,
contingent liabilities and contingent assets', and
- IAS 39, Financial instruments -- Recognition and measurement'.
• Annual improvements 2013 (effective annual periods on or after 1 July 2014 although
endorsed for annual periods on or after 1 January 2015): The amendments include changes
from the 2011-2-13 cycle of the annual improvements project that affect 3 standards:
- IFRS 1, 'First time adoption'
- IFRS 3, 'Business combinations' and
- IFRS 13, 'Fair value measurement'
(ii) Standards, amendments and interpretations to existing standards that are not yet effective
and have not been early adopted by the Group
The following standards, amendments and interpretations to existing standards are not yet
effective for accounting periods beginning on or after 1 January 2016 and have not been
early adopted by the Group:
• IFRS 10 -- Consolidated Financial Statements -- (Amendment effective January 1 2016). This
amendment clarifies the accounting for loss of control of a subsidiary when the subsidiary
does not constitute a business.
• 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
- The carrying amount of the asset does not limit the estimation of probable future taxable
- Estimates for future taxable profits exclude tax deductions resulting from the reversal of
deductible temporary differences.
- An entity assesses a deferred tax asset in combination with other deferred assets. Where
tax law restricts the utlisation of tax losses, an entity would assess a deferred tax assets in
combination with other deferred tax assets of the same type.
• IFRS 9 -- 'Financial instruments part 1: Classification and measurement' (effective 1 January
2018). IFRS 9 was issued in November 2009 and October 2010. It replaces the parts of
IAS 39 that relate to the classification and measurement of financial instruments. The
completed standard was issued in July 2014, with an effective date of 1 January 2018.
IFRS 9 requires financial assets to be classified into two measurement categories: those
measured as at fair value and those measured at amortised cost. The determination is made
at initial recognition. The classification depends on the entity's business model for managing
its financial instruments and the contractual cash flow characteristics of the instrument. For
financial liabilities, the standard retains most of the IAS 39 requirements. The main change
is that, in cases where the fair value option is taken for financial liabilities, the part of a
fair value change due to an entity's own credit risk is recorded in other comprehensive
income rather than the income statement, unless this creates an accounting mismatch. The
additional amendments in July 2014 introduced a new expected loss impairment model and
limited changes to the classification and measurement requirements for financial assets.
This amendment completes the IASB's financial instruments project and the Standard. The
Group is yet to assess IFRS 9's full impact.
• 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
is 12 months and less or the underlying asset has a low value. Lessors continue to classify
leases as operating or finance.
• IFRS 11 -- Joint Arrangements -- (Amendment effective 1 January 2016). This amendment
requires an acquirer of an interest in a joint operation in which the activity constitutes a
business (as defined in IFRS 3 Business Combinations) to:
- Apply all of the business combinations accounting principles in IFRS 3 and other IFRSs,
except for those principles that conflict with the guidance in IFRS 11.
- Disclose the information required by IFRS 3 and other IFRSs for business combinations.
- The amendments apply both to the initial acquisition of an interest in joint operation, and
the acquisition of an additional interest in a joint operation (in the latter case, previously
held interests are not remeasured).
• IAS 16 -- Property, Plant and Equipment and IAS 38 Intangible Assets (amendment effective
1 January 2016) This amendment is to:
- clarify that a depreciation method that is based on revenue that is generated by an activity
that includes the use of an asset is not appropriate for property, plant and equipment
- introduce a rebuttable presumption that an amortisation method that is based on
the revenue generated by an activity that includes the use of an intangible asset is
inappropriate, which can only be overcome in limited circumstances where the intangible
asset is expressed as a measure of revenue, or when it can be demonstrated that
revenue and the consumption of the economic benefits of the intangible asset are highly
correlated add guidance that expected future reductions in the selling price of an item
that was produced using an asset could indicate the expectation of technological or
commercial obsolescence of the asset, which, in turn, might reflect a reduction of the
future economic benefits embodied in the asset.
• IAS 28 -- Investments in Associates and Joint Venture -- (Amendment effective 1 January
2016). This amendment clarifies the accounting for loss of control of a subsidiary when the
subsidiary does not constitute a business.
The Group is in the process of assessing the impact of the new and revised standards not yet
effective on the financial statements.
(i) Principles of consolidation
The consolidated financial statements include the accounts of the Bank and its wholly owned
subsidiaries as outlined in Note 1. The financial statements of the consolidated subsidiaries
used to prepare the consolidated financial statements were prepared as of the parent
company's reporting date. The consolidation principles are unchanged as against the previous
Inter-company transactions, balances and unrealised gains on transactions between Group
companies are eliminated on consolidation. Unrealised losses are also eliminated unless the
transaction provides evidence of impairment of the asset transferred. The accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
(ii) Investment in subsidiaries
Subsidiaries are all entities, (including structured entities) over which the Group has control.
The Group controls an entity when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred to the former owners of the acquiree and the equity
interests issued by the Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The Group recognises any non-
controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value
or at the non-controlling interest's proportionate share of the recognised amounts of the
acquiree's identifiable net assets.
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