Republic Bank Limited
86
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)
i) Business combinations and goodwill
The Group uses the purchase method of accounting to account for the acquisition of subsidiaries. The cost of an acquisition
is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount
of any non-controlling interests in the acquiree. For each business combination, the Group elects to measure the non-
controlling interests in the acquiree at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related
costs are expensed as incurred.
If the business combination is achieved in stages, any previously held equity interest is remeasured at its acquisition date fair
value and any resulting gain or loss is recognised in the statement of income.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and
liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the
Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews
the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in
an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised
in the statement of income.
As at acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the
combination’s synergies. After 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.
Impairment is determined by assessing the recoverable amount of the cash-generating unit, to which goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is
recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
j) Employee benefits
i) Pension obligations
The Group operates a number of defined benefit plans, the assets of which are held in separate trustee-administered
funds. The pension plans are 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.
