Annual Report 2011 - Jordan Investment and Finance bank

62-GainsNotes to the consolidtaed financial statementsor losses resulting from foreign currency translation are recorded inthe consolidated statement of income.-Translation differences on non-monetary assets and liabilities denominatedin foreign currencies are recorded as part of the change in fair value.Cash and Cash EquivalentsCash and cash equivalents comprise cash balances with the Central Bank ofJordan and balances with banks and financial institutions maturing withinthree months, less balances due to banks and financial institutions maturingwithin three months and restricted funds.Accounting EstimatesPreparation of the consolidated financial statements and the application of theaccounting policies require the Bank’s management to perform assessmentsand assumptions that affect the amounts of financial assets and liabilities,fair value reserve and the disclosure of contingent liabilities. Moreover, theseassessments and assumptions affect revenues, expenses, provisions, andchanges in the fair value shown within the consolidated statement of othercomprehensive income. In particular, this requires the Bank’s managementto issue significant judgments and assumptions to assess future cash flowamounts and their timing. Moreover, the said assessments are necessarilybased on assumptions and factors with varying degrees of consideration anduncertainty. In addition, actual results may differ from assessments dueto the changes resulting from the conditions and circumstances of thoseassessments in the future.-Management frequently reviews the financial assets stated at cost to estimateany decline in their value. Impairment loss (if any) is taken to the consolidatedstatement of income as an expense for the year.-Management estimates the impairment in fair value when the market valuereaches a certain limit indicative of the amount of impairment loss.- Fair Value Hierarchy:The Bank determines and discloses the level in the fair value hierarchyinto which the fair value measurements are categorised in their entirety,segregating fair value measurements in accordance with the levels definedin IFRS. Differentiating between Level 2 and Level 3 fair value measurements,i.e., assessing whether inputs are observable and whether the unobservableinputs are significant, may require judgement and a careful analysis of theinputs used to measure fair value, including consideration of factors specificto the asset or liability.We believe that our estimates adopted in the preparation of the consolidatedfinancial statements are reasonable.63Notes to the consolidtaed financial statements-A provision is set against the lawsuits raised against the Bank. This provisionis subject to an adequate legal study prepared by the Bank’s legal advisors.Moreover, the study highlights potential risks that the Bank may encounter inthe future. Such legal assessments are reviewed periodically.- A provision for performing and non-performing loans is taken on the basesand estimates approved by the Bank’s management in conformity withInternational Financial Reporting Standards (IFRS). The outcome of thesebases and estimates is compared against the adequacy of the provisionsas per the Central Bank of Jordan’s instructions. The strictest outcomethat conforms to International Financial Reporting Standards is used fordetermining the provision.-Impairment loss (if any) is booked after a sufficient and recent evaluation ofthe assets seized by the Bank has been conducted by approved surveyors. Theimpairment loss is reviewed periodically.-Management periodically reassesses the economic useful lives of tangibleand intangible assets for the purpose of calculating annual depreciationand amortization based on the general condition of these assets and theassessment of their useful economic lives expected in the future. Impairmentloss (if any) is taken to the consolidated statement of income.