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BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED
ANNUAL REPORT 2013
2. ACCOUNTING POLICIES
(CONTINUED)
2.3 Summary of significant accounting policies (continued)
e) Financial instruments
(continued)
Held to maturity financial investments
Held to maturity financial investments are non-derivative financial assets with fixed or determinable payments and fixed
maturities, which the Group has the intention and ability to hold to maturity.
After initial measurement, held to maturity financial investments are subsequently measured at amortised cost using the
effective interest rate method (EIR), less any impairment losses. Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees that are an integral part of the effective interest rate. The Group has reported
government securities which have all been classified under the held to maturity classification.
Impairment losses are reported as a deduction from the carrying value of the investment (through an allowance account)
or investment balance The amount recorded for impairment is the cumulative loss measured as the difference between the
amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the statement
of income.
If the Group were to sell or reclassify more than an insignificant amount of held to maturity investments before maturity
(other than in certain specific circumstances), the entire category would be tainted and would have to be reclassified as
available-for-sale. Furthermore, the Group would be prohibited from classifying any financial asset as held to maturity for the
current and during the following two financial years.
Available-for-sale financial investments
Available-for-sale investments include equity securities. Equity securities classified as available-for-sale are those which are
neither classified as held for trading nor designated at fair value through profit or loss.
After initial measurement, available-for-sale financial investments are subsequently re-measured at fair value based on
quoted bid prices or amounts derived from approved valuation models. Unrealised gains and losses on available-for-sale
securities are recognised directly in the fair value reserve in equity and reported under other comprehensive income.
When the investment is disposed of, the cumulative gain or loss previously recognised in equity is recognised in the
statement of income.
Unquoted equity instruments for which fair values cannot be measured reliably are recognised at cost less impairment.
For available-for-sale financial investments, the Group assesses at each statement of financial position date whether there is
objective evidence that an investment is impaired. Where there is evidence of impairment, the cumulative loss – measured as
the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously
recognised in the statement of income – is removed from other comprehensive income and recognized in the statement of
income. Impairment losses on equity investments are not reversed through the statement of income; increases in their fair
value after impairment are recognised directly in other comprehensive income.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the
effective interest method, less impairment.
Impairment losses are reported as a deduction from the carrying value of the loan (through an allowance account) or
balance and recognised in the statement of income as a provision for impairment.
Financial liabilities
The Group’s financial liabilities include customer deposits, loans payable, reimbursable shares and other liabilities. The Group
determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair
value and in the case of loans payable, net of directly attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest method. Gains and losses are recognised in the income statement when the liabilities are derecognised. A
financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Notes to the Consolidated Financial Statements
For the year ended March 31, 2013, with comparative figures for 2012
(Expressed in Barbados dollars)
