REPUBLIC BANK LIMITED
66
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)
2.6 Summary of significant accounting policies
(continued)
f) Premises and equipment
(continued)
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each statement of financial position date. Gains
and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the consolidated
statement of income.
Depreciation other than on leasehold buildings and leased equipment is computed on the declining balance method at rates
expected to apportion the cost of the assets over their estimated useful lives.
The depreciation rates used are as follows:
Freehold and leasehold premises
2%
Equipment, furniture and fittings
15% - 33.33%
g) Goodwill
Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the Group’s interest
in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired.
As at acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the
combination’s synergies. Impairment is determined by assessing the recoverable amount of the cash-generating unit, to which goodwill
relates. The recoverable amount is the higher of fair value less cost to dispose or value in use. Where the recoverable amount of the cash-
generating unit is less than the carrying amount, an impairment loss is recognised.
h) Employee benefits
i) Pension obligations
The Group operates a number of defined benefit plans, the assets of which are generally held in separate trustee-administered funds.
The pension plans are generally funded by payments from the relevant Group companies, taking account of the recommendations
of independent qualified actuaries who carry out the full valuation of the Plans every three years. In Trinidad, the Parent, Republic
Bank Limited, took the actuary’s advice regarding a pension holiday, effective January 1999.
Annually, the Bank’s independent actuaries conduct a valuation exercise to measure the effect of all employee benefit plans.
For these defined benefit plans, the pension accounting costs are assessed using the projected unit credit method. Under this
method, the cost of providing pensions is charged to the consolidated statement of income so as to spread regular costs over the
service lives of employees in accordance with the advice of qualified actuaries.
The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of government
securities which have terms to maturity approximating the terms of the related liability. Re-measurements of the net defined benefit
liability, which comprise actuarial gains and losses and return on plan assets (excluding interest) are recognised immediately through
other comprehensive income.
The defined benefit plans mainly expose the Group to risks such as investment risk, interest rate risk and longevity risk.
The above accounting requirement in no way affects the pension plans which continue to be governed by the approved Trust
Deed and Rules and remain under the full control of the appointed Trustees.
The full results of the valuation exercise are disclosed in Note 9 to these consolidated financial statements.
