Financial Reporting and Ethics - The Institute of Chartered ...

ACCOUNTING AND REPORTING POLICIES(j)(k)(l)(m)Advances Under Finance LeaseAdvances to customers under finance leases are stated net of unearnedincome. Lease finance is recognized in a manner which provides aconstant yield on the outstanding net investment over the lease period.Fixed AssetsFixed assets are stated at cost or valuation less accumulateddepreciation.DepreciationDepreciation is provided to write off the cost of fixed assets over theirestimated useful lives on a straight line basis at the following annualrates:Freehold buildings - 2% from date of useLeasehold buildings:50 years and over - 2% from date of use.Below 50 years - Over the term of the lease.Assets on Lease - Over the term of the lease.Motor Vehicles - 25%Computer equipment - 33 1 / 3%Other fixed assets - 20%Fororeign currenciesTransactions in foreign currencies are translated to Naira at the rate ofexchange ruling at the date of the transactions.Foreign currency balances are converted to Naira at the rate of exchangeruling at the balance sheet date and the resultant profit/loss onconversion is taken to profit and loss account in respect of Bank-ownedfunds and the rest charged/credited to third parties. The Bank’s equityinvestment in FBN Bank (UK) Limited is stated at transaction cost.(n)(o)TaxationIncome tax is provided on taxable profit at the current statutory rate.Provision for deferred taxation is made using the liability method andcalculated at the current rate of taxation on the differences between thenet book values of qualifying fixed assets and their corresponding taxwritten down values.BorrowingsBorrowings are recorded at the proceeds received, plus direct issue costs.The capitalized direct issuing costs are amortized over the tenor of theunderlying instrument.13