Home' Trinidad and Tobago Guardian : December 31st 2013 Contents A54
Guardian www.guardian.co.tt Tuesday, December 31, 2013
Unconsolidated Financial Statements for the year ended September 2013
First Citizens Holdings Limited
2 Summary of Significant Accounting Policies (continued)
2.1 Basis of preparation (continued)
b) Standards, amendments and interpretations which are not yet effective and have not been
early adopted by the Company (continued)
- All equity instruments are to be measured subsequently at fair value. Equity instruments
that are held for trading will be measured at fair value through profit or loss. For all other
equity investments, an irrevocable election can be made at initial recognition, to recognise
unrealised and realised fair value gains and losses through other comprehensive income
rather than profit or loss. There is to be no recycling of fair value gains and losses to profit
or loss. This election may be made on an instrument-by-instrument basis. Dividends are to
be presented in profit or loss, as long as they represent a return on investment.
The Company is assessing the impact of this standard.
information about rights of set-off and related arrangements (e.g. collateral agreements).
The disclosures would provide users with information that is useful in evaluating the effect
of netting arrangements on an entity's financial position. The new disclosures are required
for all recognised financial instruments that are set off in accordance with IAS 32 Financial
Instruments: Presentation. The disclosures also apply to recognised financial instruments
irrespective of whether they are set off in accordance with IAS 32.
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.
value is used, but rather describes how to measure fair value where fair value is required or
permitted by IFRS. Fair value under IFRS 13 is defined as "the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date" (i.e. an "exit price"). "Fair value" as used in IFRS 2
Share-based Payments and IAS 17 Leases is excluded from the scope of IFRS 13.
government loan with a below market rate of interest when transitioning to IFRS. It also
adds and exception to the retrospective application of IFRS, which provides the same relief
to first time adopters granted to existing preparers of IFRS financial statements when the
requirement was incorporated into IAS 20 in 2008.
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.
2.2 Investment in subsidiary
Subsidiaries are all entities (including special purpose entities) over which the Company 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 and convertible are considered when assessing whether the Company
controls another entity. The company 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.
De facto control may arise in circumstances where the size of the company's voting rights relative
to the size and dispersion of holdings of other shareholders give the company the power to govern
the financial and operating policies, etc.
The investment in subsidiary is accounted for at cost in these unconsolidated financial statements.
2.3 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Company's entities are measured
using the currency of the primary economic environment in which the entity operates (the
functional currency). The unconsolidated financial statements are presented in Trinidad and
Tobago dollars, which is the Company's presentation currency. The exchange rate between
the TT dollar and the US dollar as at the date of these statements was TT$6.3506 = US$1.00
(2012: TT$6.3503 = US$1.00), which represent the Group's mid-rate.
(b) 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 of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.
2.4 Financial assets
The Company classifies its financial assets as loans and receivables. The classification depends
on the purpose for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition and re-evaluates this designation at every
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market.
2.5 Impairment of financial assets
(a) Assets carried at amortised cost
The Company assesses at each reporting date whether there is objective evidence that a
financial asset or group of financial assets is impaired. A financial asset or a group of financial
assets is impaired and impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the
flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Company uses to determine that there is objective evidence of an
impairment loss include:
i) Delinquency in contractual payments of principal or interest;
ii) Cash flow difficulties experienced by the borrower (for example, equity ratio, net income
percentage of sales);
iii) Breach of loan covenants or conditions;
iv) Initiation of bankruptcy proceedings;
v) Deterioration of the borrower's competitive position;
vi) Deterioration in the value of collateral; and
vii) Downgrading below investment grade level.
The Company first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant. If the Company determines that no objective
evidence of impairment exists for an individually assessed financial asset, whether significant
or not, it includes the asset in a group of financial assets with similar credit risk characteristics
and collectively assesses them for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognised are not included
in a collective assessment of impairment.
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 consolidated income statement. 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 Group 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 income.
2.6 Financial instruments and right of offset
Financial assets and liabilities are offset and the net amount reported in the statement of financial
position where there is a legally enforceable right to set off the recognised amounts and there
is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
The Company manages its risk exposure and if the need arises will engage in hedging activities to
protect asset value consistent with existing circumstances.
NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS (continued)
(expressed in Trinidad and Tobago dollars)
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