Home' Trinidad and Tobago Guardian : December 28th 2016 Contents 5
First Citizens Holdings Limited And Its Subsidiaries
Consolidated Financial Statements
30 September 2016
2 Summary of significant accounting policies (continued)
b. Consolidation (continued)
(iii) Business combinations and goodwill
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the
acquirer's previously held equity interest in the acquiree is re-measured to fair value at the
acquisition date; any gains or losses arising from such re-measurement are recognised in
profit or loss.
Any contingent consideration in relation to financial instruments to be transferred by the
Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value
of the contingent consideration that is deemed to be an asset or liability is recognised in
accordance with IAS 39 either in profit or loss or as a change to other comprehensive income.
Contingent consideration that is classified as equity is not re-measured, and its subsequent
settlement is accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in
the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree
over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total
of consideration transferred, non-controlling interest recognised and previously held interest
measured is less than the fair value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognised directly in the consolidated income statement.
(iv) Transactions and non-controlling interests
Transactions with non-controlling interests that do not result in loss of control are accounted
for as equity transactions -- that is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the relevant share acquired
of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on
disposals to non-controlling interests are also recorded in equity.
(v) Investment in joint ventures
The Group has applied IFRS 11 to all joint arrangements as of 1 January 2012. Under IFRS
11 investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual rights and obligations of each investor. The Group has assessed
the nature of its joint arrangements and determined them to be joint ventures. Joint ventures
are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognised at
cost and adjusted thereafter to recognise the Group's share of the post-acquisition profits or
losses and movements in other comprehensive income. When the Group's share of losses in a
joint venture equals or exceeds its interests in the joint ventures (which includes any long-term
interests that, in substance, form part of the Group's net investment in the joint ventures), the
Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the joint ventures.
(vi) Investment in associates
Associates are all entities over which the Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are initially recognised at cost and adjusted thereafter to recognise
the Group's share of the post-acquisition profits or losses and movements in other
comprehensive income. The Group's investment in associates includes goodwill identified on
If the ownership interest in an associate is reduced but significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income is
reclassified to profit or loss where appropriate.
The Group's share of post-acquisition profit or loss is recognised in the income statement,
and its share of post-acquisition movements in other comprehensive income is recognised in
other comprehensive income with a corresponding adjustment to the carrying amount of the
investment. When the Group's share of losses in an associate equals or exceeds its interest
in the associate, the Group does not recognise further losses, unless it has incurred legal or
constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, the Group calculates the amount
of impairment as the difference between the recoverable amount of the associate and its
carrying value and recognises the amount adjacent to 'share of profit/(loss) of associates' in
the consolidated income statement.
Profits and losses resulting from upstream and downstream transactions between the Group
and its associate are recognised in the Group's financial statements only to the extent of
unrelated investor's interests in the associates. Unrealised losses are eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies
of associates have been changed where necessary to ensure consistency with the policies
adopted by the Group.
(Expressed in Trinidad and Tobago dollars)
c. Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured
using the currency of the primary economic environment in which the entity operates (the
functional currency). The consolidated financial statements are presented in Trinidad and
Tobago dollars, which is the Group'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= US$1.00), which represent the Group's mid-rate. The exchange
rate between the TT dollar and the Barbados dollar as at the date of these statements was
TT$3.3883 = BB$1 (2015: TT$3.1852 = BB$1.00), which represent the Group's cover rate.
(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 at year end exchange rates
of monetary assets and liabilities denominated in foreign currencies are recognised in the
consolidated income statement.
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 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.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of
a hyper-inflationary economy) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
(a) assets and liabilities for each balance sheet presented are translated at the closing rate at
the date of that balance sheet;
(b) income and expenses for each income statement are translated at cover exchange rates
as at year end, and
(c) all resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated
as assets and liabilities of the foreign entity and translated at the closing rate. Exchange
differences arising are recognised in other comprehensive income.
d. Derivative financial instruments
Derivative financial instruments including swaps are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently re-measured at their fair value. The
method of recognising the resulting gain or loss depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of the item being hedged.
e. Financial assets and financial liabilities
(i) Financial assets
The Group classifies its financial assets in the following categories: financial assets designated
as at fair value through profit or loss, loans and receivables, held to maturity 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 initial recognition.
(a) 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 Group 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 entity upon initial recognition designates as available-for-sale;
• Those assets for which the holder may not recover all of its initial investment, other
than because of credit deterioration, which shall be classified as available-for-sale.
(b) 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.
(c) Financial assets at fair value through profit or loss
This category includes financial assets designated by the Group as fair value through
profit or loss upon initial recognition.
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