Financial Statements - United Bank Limited

NOTES TO AND FORMING PART OF THE UNCONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2012
5.6.3 Intangible assets
Intangible assets are stated at cost less accumulated amortization and accumulated impairment losses, if any. The cost
and the accumulated amortization of intangible assets of foreign branches include exchange differences arising on
currency translation at the year-end rates of exchange. Amortization is calculated so as to write off the amortizable
amount of the assets over their expected useful lives at the rates specified in note 11.3 to these unconsolidated financial
statements. The amortization charge for the year is calculated on a straight line basis after taking into account the
residual value, if any. The residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of
financial position date. Amortization on additions is charged from the month the asset is available for use.
5.7 Impairment
Impairment in available for sale equity investments
Available for sale equity investments are impaired when there has been a significant or prolonged decline in the fair value
below their cost. The determination of what is significant or prolonged requires judgment. In making this judgment, the
Bank evaluates, among other factors, the normal volatility in share price.
Impairment in investments in associates and subsidiaries
The Bank considers that a decline in the recoverable value of the investment in associates and subsidiaries below their
cost may be evidence of impairment. Recoverable value is calculated as the higher of fair value less costs to sell and
value in use. An impairment loss is recognized when the recoverable value falls below the carrying value and is charged
to the profit and loss account. A subsequent reversal of an impairment loss, upto the cost of the investment in associates
and subsidiaries, is credited to the profit and loss account.
Impairment in non-financial assets (excluding deferred tax)
The carrying amounts of non-financial assets are reviewed at each reporting date for impairment whenever events or
changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. If such indication
exists, and where the carrying value exceeds the estimated recoverable amount, assets are written down to their
recoverable amount. The resulting impairment loss is charged to the profit and loss account except for an impairment
loss on revalued assets, which is adjusted against the related revaluation surplus to the extent that the impairment loss
does not exceed the revaluation surplus.
5.8 Taxation
5.8.1 Current
Provision for current taxation is based on taxable income for the year determined in accordance with the prevailing laws
for taxation on income earned from local as well as foreign operations. The charge for current tax is calculated using
prevailing tax rates.
5.8.2 Prior years
The charge for prior years consists of adjustments relating to prior years, arising from assessments made during the
current year.
5.8.3 Deferred
Deferred tax is recognized using the liability method on all major temporary differences between the amounts attributed
to assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is
calculated at the rates that are expected to apply to the period when the differences are expected to reverse, based on
tax rates that have been enacted or substantively enacted at the statement of financial position date.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against
which the assets can be utilized.
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