Republic Bank Limited
84
For the year ended September 30, 2015. Expressed in thousands of Trinidad and Tobago dollars ($’000) except where otherwise stated
Notes to theConsolidatedFinancial Statements
4
Financial
2 SIGNIFICANT ACCOUNTING POLICIES
(continued)
2.6 Summary of significant accounting policies
(continued)
d) Impairment of financial assets
(continued)
ii) Investment securities
(continued)
If an available-for-sale equity security is impaired based upon the Group’s qualitative or quantitative impairment
criteria, any further declines in the fair value at subsequent reporting dates are recognised as impairments. Therefore,
at each reporting period, for an equity security that is determined to be impaired based upon the Group’s impairment
criteria, an impairment is recognised for the difference between the fair value and the original cost basis, less any
previously recognised impairments.
e) Investment in Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the
financial and operating policy decisions of the investee, but is not control or joint control over those policies.
The Group’s investments in associates are accounted for under the equity method of accounting.
The investments in associates are initially recognised at cost and adjusted to recognise changes in the Group’s share of net
assets of the associate, less any impairment in value. Goodwill relating to the associate is included in the carrying amount
of the investment and is not tested for impairment individually.
The consolidated statement of income reflects the Group’s net share of the results of operations of the associates. Any
change in Other Comprehensive Income (OCI) of those investees is presented as part of the Group’s OCI. In addition, when
there has been a change recognised directly in the equity of the associate the Group recognises its share of any changes,
when applicable, in the statement of changes in equity.
The Group determines whether it is necessary to recognise an impairment loss on its investment in its associates. At each
reporting date, the Group determines whether there is objective evidence that the investment in the associate is impaired. If
there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount
of the associate and its carrying value, and then recognises the loss in the statement of income.
f) Leases
Finance Leases
Finance charges on leased assets are taken into income using the amortisation method. This basis reflects a constant
periodic rate of return on the lessor’s net investment in the finance lease. Finance leases net of unearned finance income
are included in the consolidated statement of financial position under advances.
Operating Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases are charged to the consolidated statement of income on a straight-
line basis over the period of the lease. Renewal of operating leases is based on mutual agreement between parties prior to
the expiration date.
