REPUBLIC BANK LIMITED
62
Notes to theConsolidatedFinancial Statements
For the year ended September 30, 2014. Expressed in thousands of Trinidad and Tobago dollars ($’000), except where otherwise stated
2 Significant accounting policies
(continued)
2.4 Standards in issue not yet effective
(continued)
IFRS 10, IFRS 12 and IAS 27 - Investment Entities (Amendments) (effective January 1, 2014)
The amendments apply to investments in subsidiaries, joint ventures and associates held by a reporting entity that meets the definition of an
investment entity. The concept of an investment entity is new to IFRS. The amendments represent a significant change for investment entities,
which are currently required to consolidate investees that they control. Significant judgement of facts and circumstances may be required to
assess whether an entity meets the definition of investment entity.
IFRS 14 - Regulatory Deferral Accounts (effective January 1, 2016)
The standard requires disclosures on the nature of and risks associated with, the entity’s rate-regulation and the effects of that rate-regulation
on its financial statements. IFRS 14 allows an entity, whose activities are subject to rate-regulation, to continue applying most of its existing
accounting policies for regulatory deferral account balances upon its first-time adoption of IFRS. Existing IFRS preparers are prohibited from
applying this standard. Also, an entity whose current GAAP does not allow the recognition of rate-regulated assets and liabilities, or that has
not adopted such policy under its current GAAP, would not be allowed to recognise them on first-time application of IFRS.
Entities that adopt IFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and
present movements in these account balances as separate line items in the statement of profit or loss and other comprehensive income.
IAS 19 - Defined Benefit Plans: Employee Contributions–Amendments to IAS 19 (effective after July 1, 2014)
IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. IAS 19 requires
such contributions that are linked to service to be attributed to periods of service as a negative benefit.
The amendments clarify that if the amount of the contributions is independent of the number of years of service, an entity is permitted
to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the
contributions to the periods of service. Examples of such contributions include those that are a fixed percentage of the employee’s salary, a
fixed amount of contributions throughout the service period, or contributions that depend on the employee’s age.
These changes provide a practical expedient for simplifying the accounting for contributions from employees or third parties in certain
situations.
IAS 32 - Offsetting Financial Assets and Financial liabilities (effective January 1, 2014)
These amendments clarify the meaning of the phrase ‘currently has a legally enforceable right to set-off’ by stating 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 amendments also clarify that
rights of set-off must not be contingent on a future event. The amendments also clarify the application of the IAS 32 offsetting criteria to
settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous.
IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets - Amendments to IAS 36 (effective January 1, 2014)
The amendments clarify the disclosure requirements in respect of fair value less costs of disposal. When IAS 36 Impairment of Assets was
originally changed as a result of IFRS 13, the IASB intended to require disclosure of information about the recoverable amount of impaired
assets if that amount was based on fair value less costs to sell. An unintended consequence of the amendments was that an entity would be
required to disclose the recoverable amount for each cash-generating unit for which the carrying amount of goodwill or intangible assets
with indefinite useful lives allocated to that unit was significant in comparison to the entity’s total carrying amount of goodwill or intangible
assets with indefinite useful lives. This requirement has been deleted by the amendment. However the IASB has added two disclosure
requirements:
Additional information about the fair value measurement of impaired assets when the recoverable amount is based on fair value less
costs of disposal.
Information about the discount rates that have been used when the recoverable amount is based on fair value less costs of disposal using
a present value technique. The amendments harmonise disclosure requirements between value in use and fair value less costs of disposal.
