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Consolidated Financial Statements
30 September 2013
Notes to the Consolidated Financial Statements (continued)
(expressed in Trinidad and Tobago dollars)
2 Summary of Significant Accounting Policies (continued)
2.1 Basis of preparation (continued)
(b) Standards, amendments and interpretations to existing standards that are not yet
effective and have not been early adopted by the Group (continued):
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
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be withdrawn, or when the related restructuring costs are recognised under IAS 37 Provisions,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.
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
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.
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.
of accounting is to be applied (including exemptions from applying the equity method in some
cases). It also prescribes how investments in associates and joint ventures should be tested for
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.
The Group is assessing the impact of these standards.
(a) 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 years.
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.
(b) Investment in subsidiaries
Subsidiaries are all entities, (including special purpose entities) over which the Group has the
power to govern the financial and operating policies generally accompanying a shareholding of
more than one half the voting rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the Group controls
another entity. The Group also assesses existence of control where it does not have more than
50% of the voting power but is able to govern the financial and operating policies by virtue of
De facto control may arise in circumstances where the size of the Group's voting rights relative to
the size and dispersion of holdings of other shareholders give the Group the power to govern the
financial and operating policies, etc.
Subsidiaries are fully consolidated from the date on which effective control is transferred to the
Group. They are de-consolidated from the date on which 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.
(c) Business combinations and goodwill
Accounting for business combinations under IFRS 3 only applies if it is considered that a business
has been acquired. A business combination is a transaction or other event in which the acquirer
obtains control of one or more businesses. Under IFRS 3, a business is defined as an integrated
set of activities and assets that is capable of being conducted and managed for the purpose of
providing a return in the form of dividends, lower cost or economic benefits directly to investors
or other owners, members or participants.
Business combinations are accounted for using the purchase method of accounting. The cost
of the acquisition is the consideration given in exchange for control over the identifiable assets,
liabilities and contingent liabilities of the acquired company. The consideration includes the cash
paid plus the fair value at the date of exchange of assets given, liabilities incurred or assumed and
equity instruments issued by the Group. Contingent consideration arrangements are included
in the cost of acquisition at fair value. Directly attributable transaction costs are expensed in the
current period and are reported in administrative expenses.
The acquired net assets, being the assets, liabilities and contingent liabilities, are initially recognised
at fair value. Where the Group does not acquire 100% ownership of the acquired company, non-
controlling interests are recorded as the proportion of the fair value of the acquired net assets
attributable to the non-controlling interest. Goodwill is recorded as the surplus of the cost of
acquisition over the Group's interest in the fair value of the acquired net assets. Any goodwill
and fair value adjustments are recorded as assets and liabilities of the acquired company in the
functional currency of that company. Goodwill is not amortised, but is assessed for possible
impairment at the year end following an acquisition, and is additionally tested annually for
Goodwill may also arise upon investments in associates, being the surplus of the cost of the
investment over the Group's share of the fair value of the net identifiable assets. Such goodwill is
recorded within investment in associates.
(d) Transactions and non-controlling interests
Changes in ownership interest in subsidiaries are accounted for as equity transactions if they occur
after control has already been obtained and if they do not result in a loss of control.
For purchases from non-controlling interests, the difference between any consideration paid and
the relevant share acquired of the carrying value of the net assets of the subsidiary is recorded in
equity. Gains or losses on disposal to non-controlling interest are also recorded in equity.
Interests in the equity of subsidiaries not attributable to the parent are reported in consolidated
equity as non-controlling interest. Profits or losses attributable to non-controlling interests are
reported in the consolidated statement of comprehensive income as profit or loss attributable to
(e) Investment in joint ventures
A joint venture exists where the Group has a contractual arrangement with one or more parties to
undertake activities through entities that are subject to joint control.
Investments in joint ventures are accounted for using the equity method of accounting. These
investments are initially recorded at cost and the carrying amount is increased or decreased to
recognise the Group's share of profits or losses
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