Annual report 2009-OK.qxp - Canadia Bank Plc.

Canadia Bank Plc.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)An uncollectible loan or portion of a loan classified as bad is written off after taking into consideration therealisable value of the collateral, if any, when in the judgment of the management, there is no prospect ofrecovery.2.7 Other credit related commitmentsIn the normal course of business, the Bank enters into other credit related commitments including loancommitments, letters of credit and guarantees. The accounting policy and provision methodology aresimilar to those for originated loans as noted above. Specific provisions are raised against other credit relatedcommitments when losses are considered probable.2.8 Investment in shares of another bankInvestment is carried at cost. Dividend is recognised as income when received.2.9 Property and equipmentProperty and equipment are stated at cost less accumulated depreciation, except freehold land which isnot depreciated. Historical cost includes expenditure that is directly attributable to the acquisition of theasset items.Annual Report 200938Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, asappropriate, only when it is probable that the future economic benefits associated with the item will flowto the Bank and cost of the item can be measured reliably. All other repairs and maintenance are chargedto the income statement during the financial year in which they are incurred.Land is not depreciated. Depreciation on other assets is calculated using the following methods and rates:Buildings - straight-line 5%Vehicles - declining 25%Office equipment - declining 25%Furniture and fixtures - declining 25%Computers and IT equipment - declining 50%An asset's carrying amount is written down immediately to its recoverable amount if the asset's carryingamount is greater than its estimated recoverable amount.Gains and losses on disposals recognised in the income statement are determined by comparing theproceeds and the carrying amount of the disposed property and equipment.2.10 Computer softwareAcquired computer software licenses are capitalised on the basis of the cost incurred to acquire thespecific software and bring it to use. These costs are amortised over a two-year period using the decliningbalance method.Costs associated with developing or maintaining computer software programs are recognised as expensewhen incurred.2.11 Impairment of non-financial assetsAssets that have indefinite useful lives are not subject to amortisation and are tested annually forimpairment. Assets that are subject to amortisation or depreciation are reviewed for impairmentwhenever events or changes in circumstances indicate that the carrying amount may not be recoverable.An impairment loss is recognised for the amount by which the asset's carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell andvalue in use.