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The Immortelle Income and Growth Fund
30 June 2013
Notes to the Financial Statements (continued)
(Expressed in Trinidad and Tobago dollars)
(c) Financial assets available-for-sale
The Fund classifies its financial assets as available-for-sale. Management determines the classification
of its financial assets at initial recognition. Financial assets 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, are classified
All purchases and sales of financial assets available-for-sale are recognised on the trade date, that is,
the date on which the Fund commits to purchase or sell the financial asset. Financial assets available-
for-sale are derecognised when the rights to receive cash flows from the financial assets have expired
or the Fund has transferred substantially all risks and rewards of ownership.
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
and losses arising from changes in the fair value of financial assets available-for-sale are recognised
directly in the Investment Re-measurement Reserve, until the financial asset is de recognised or
impaired. At this time, the cumulative gain or loss previously recognised in the Investment Re-
measurement Reserve is recognised in the Statement of Net Investment Income.
Fair value estimation
The fair values of quoted financial assets in active markets are based on current bid prices. If there
is no active market for a financial asset, the Fund establishes fair value using valuation techniques.
These include the use of recent arm's length transactions, discounted cash flow analysis, option
pricing models and other valuation techniques commonly used by market participants.
(d) Impairment of financial assets
The Fund assesses at each Statement of Net Assets date whether there is objective evidence that
a financial asset is impaired. In the case of equity financial assets 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 financial assets available-
for-sale, 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 the
Statement of Net Investment Income -- is removed from the Investment Re-measurement Reserve
and recognised in the Statement of Net Investment Income. Impairment losses recognised in the
Statement of Net Investment Income on equity instruments are not reversed through the Statement
of Net Investment Income. If, in a subsequent period, the fair value of a debt instrument classified as
available-for-sale increased and the increase can be objectively related to an event occurring after the
impairment loss was recognised in the Statement of Net Investment Income, the impairment loss is
reversed through the Statement of Net Investment Income.
Objective evidence that a financial assets available-for-sale is impaired includes observable data that
comes to the attention of the Fund about the following loss events:
(i) a significant financial difficulty of the issuer or debtor;
(ii) a breach of contract, such as default or delinquency in payment;
(iii) it becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganisation;
(iv) the disappearance of an active market for the financial asset because of financial difficulties; and
(v) observable data indicating that there is a measurable decrease in the estimated future cash
flows from a group of individual assets since the initial recognition of those assets, although the
decrease cannot yet be identified with the individual financial assets in the group including:
- adverse changes in the payment status of issuers or debtors in the group
- national or local economic conditions that correlate with defaults on assets in the group
(e) Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash and cash equivalents comprise of cash in
hand, deposits held at call with banks and investments in money market instruments, net of bank
Provisions are recognised when the Fund has a present legal or constructive obligation as a result
of past events; it is more likely than not that an outflow of resources will be required to settle the
obligation; and the amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that a outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.
(g) Net assets attributable to unitholders
Units are redeemable at the unitholder's option subject to certain restrictions as outlined in Note 1
and are classified as financial liabilities. The distribution on these units is recognised in the Statement
of Net Investment Income. The units can be put back to the Fund at any time for cash equal to a
proportionate share of the Fund's net asset value as determined under the Trust Deed.
(h) Interest and dividend income
Interest income is recognised in the Statement of Net Investment Income using the effective interest
method. Dividends on equity instruments are recognised in the Statement of Net Investment Income
when the Fund's right to receive payment is established.
2. Summary of Significant Accounting Policies (Cont'd):
1 January 2014 and applicable to the Fund 1 July 2014). This requires that "a financial asset
and a financial liability shall be offset ... when, and only when, an entity currently has a legally
enforceable right to set off the recognised amounts ..." The amendments clarify that rights
of set-off must not only be legally enforceable in the normal course of business, but must also
be enforceable in the event of default and the event of bankruptcy or insolvency of all of the
counterparties to the contract, including the reporting entity itself.
(iv) Standards, amendments and interpretations issued which are not yet effective and not relevant
to the fund:
a parent to present consolidated financial statements as those of a single economic entity,
replacing the requirements previously contained in IAS 27 Consolidation and Separate
Financial Statements and SIC-12 Consolidation - Special Purpose Entities.
amendments, dealing with loans received from governments at a below market rate of
interest, give first-time adopters of IFRSs relief from full retrospective application of IFRSs
when accounting for these loans on transition. This is the same relief as was given to existing
preparers of IFRS financial statements.
in Joint Ventures. The standard requires a party to a joint arrangement to determine the type
of joint arrangement in which it is involved by assessing its rights and obligations and then
account for those rights and obligations in accordance with that type of joint arrangement.
requires extensive disclosure of information that enables users of financial statements to
evaluate the nature of, and risks associated with, interests in other entities and the effects of
those interests on its financial position, financial performance and cash flows.
a number of amendments that range from fundamental changes to simple clarifications and
re-wording. The more significant changes include the following:-
For defined benefit plans, the ability to defer recognition of actuarial gains and losses (i.e., the
corridor approach) has been removed. As revised, actuarial gains and losses are recognised in
OCI as they occur. Amounts recorded in profit or loss are limited to current and past service
costs, gains or losses on settlements, and net interest income (expense). All other changes in
the net defined benefit asset (liability) are recognised in OCI with no subsequent recycling to
profit or loss.
Objectives for disclosures of defined benefit plans are explicitly stated in the revised standard,
along with new or revised disclosure requirements. These new disclosures include quantitative
information about the sensitivity of the defined benefit obligation to a reasonably possible
change in each significant actuarial assumption.
Termination benefits will be recognised at the earlier of when the offer of termination cannot
be withdrawn, or when the related restructuring costs are recognised under IAS 37 Provisions,
Contingent Liabilities and Contingent Assets.
The distinction between short-term and other long-term employee benefits will be based on
the expected timing of settlement rather than the employee's entitlement to the benefits.
Standard requires that when an entity prepares separate financial statements, investments
in subsidiaries, associates and jointly controlled entities are accounted for either at cost, or in
accordance with IFRS 9 Financial Instruments.
2013). This Standard supersedes IAS 28 Investments in Associates and prescribes the
accounting for investments in associates and sets out the requirements for the application of
the equity method when accounting for investments in associates and joint ventures.
(b) Foreign currency transactions
Functional and presentation currency
The financial statements are presented in Trinidad and Tobago dollars which is the Fund's functional
and presentational currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using 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 Statement of Net
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