Trinidad and Tobago Unit Trust Corporation
Notes
to the Consolidated
Financial Statements
FOR THE YEAR ENDED
31 DECEMBER, 2012
Expressed in
Trinidad and Tobago dollars
A11
2) SIGNIFICANT ACCOUNTING POLICIES
(continued)
e) Impairment of Financial Assets
(continued)
Where there is objective evidence of impairment to financial
assets carried at amortised cost, the Group measures the amount
of the loss 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 asset’s carrying
amount is reduced and the amount of the loss is recognised in
the Consolidated Statement of Income. If a held-to-maturity
investment 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 reversal of
the previously recognised impairment loss is recognised in the
Consolidated Statement of Income.
Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset or a group of
financial assets classified as available-for-sale is impaired. For
debt securities, the Group uses the criteria used for assets carried
at amortised cost (see above). In the case of equity investments
classified as available-for-sale, a significant or prolonged decline
in the fair value of the security below its cost is considered
evidence that the asset is impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss – measured
as the difference between the acquisition cost and the current fair
value, less any impairment loss on that financial asset previously
recognised in profit or loss – is removed fromequity and recognised
in the Consolidated Statement of Income.
Impairment losses recognised in the Consolidated Statement
of Income on equity investments are not reversed through the
Consolidated Statement of Income. If, in a subsequent period,
the fair value of a debt instrument classified as available-for-
sale increases and the increase can be objectively related to an
event occurring after the impairment loss was recognised in the
Consolidated Statement of Income, the impairment loss is reversed
in the Consolidated Statement of Income.
Unit Trust Corporation
Annual Report 2012
