Annual Report 2012 - National Savings Bank

216THE RESULTS OF A CHALLENGING YEARNOTES TO THE FINANCIAL STATEMENTScalculated based on the original EIR andthe change in carrying amount is recordedas ‘Other operating income’. However,for a reclassified financial asset for whichthe Bank subsequently increases itsestimates of future cash receipts as aresult of increased recoverability of thosecash receipts, the effect of that increaseare recognised as an adjustment to the EIRfrom the date of the change in estimate.Once the recorded value of a financial assetor a group of similar financial assets hasbeen reduced due to an impairment loss,interest income continues to be recognizedusing the rate of interest used to discountthe future cash flows for the purpose ofmeasuring the impairment loss.Cash and cash equivalents as referred to inthe cash flow statement comprises cash inhand, non-restricted current accounts withCentral Banks and amounts due from bankson demand or with an original maturity ofthree months or less.ii. Fee and commission incomeFees earned for the provision of servicesand credit related fees are recognized in theyear in which the income is received.2.4. Property, Plant and EquipmentProperty, Plant and Equipment is statedat cost or valuation excluding the costs ofday–to–day servicing, less accumulateddepreciation and accumulated impairmentin value. Changes in the expecteduseful life are accounted for by changingthe depreciation period or method, asappropriate, and treated as changes inaccounting estimates.Depreciation is calculated using thestraight–line method to write down the costof property and equipment to their residualvalues over their estimated useful lives.Land is not depreciated. The estimateduseful lives are as follows:Category of AssetPeriod ofDepreciationLeasehold Propertyover theperiod of leaseFreehold Buildings2.5% p.a.Office & Sundry Equipments 10% p.a.Motor Vehicles20% p.a.Computer Hardware & Software 25% p.a.Furniture and Fittings 10% p.a.The group provide depreciation on assetsfrom the date on which they are availablefor use to the date disposal.Property, Plant and Equipment isderecognised on disposal or when nofuture economic benefits are expectedfrom its use. Any gain or loss arising onderecognition of the asset (calculated asthe difference between the net disposalproceeds and the carrying amount of theasset) is recognised in ‘Other operatingincome’ in the Income Statement in theyear the asset is derecognised.2.5 Intangible AssetsThe Bank’s other intangible assets includethe value of computer software. Anintangible asset is recognised only whenits cost can be measured reliably and it isprobable that the expected future economicbenefits that are attributable to it will flowto the Bank.Intangible assets acquired separately aremeasured on initial recognition at cost.The cost of intangible assets acquired in abusiness combination is their fair value asat the date of acquisition. Following initialrecognition, intangible assets are carried atcost less any accumulated amortisation andany accumulated impairment losses.The useful lives of intangible assets areassessed to be either finite or indefinite.Intangible assets with finite lives areamortised over the useful economiclife. The amortisation period and theamortisation method for an intangible assetwith a finite useful life are reviewed at leastat each financial year–end. Changes in theexpected useful life or the expected patternof consumption of future economic benefitsembodied in the asset are accountedfor by changing the amortisation periodor method, as appropriate, and they aretreated as changes in accounting estimates.The amortisation expense on intangibleassets with finite lives is recognised inthe Income Statement in the expensecategory consistent with the function of theintangible asset.2.6 Pension Benefits2.6.1 Defined benefit pension planThe Bank operates a defined benefit pensionplan, for the permanent staff members whohave joined the Bank prior to 1st October1995, which requires contributions to bemade to a separately administered fund. Thecost of providing benefits under the definedbenefit plan is determined separately usingthe projected benefit actuarial valuationmethod. Actuarial gains and losses are fullyNATIONAL SAVINGS BANK . ANNUAL REPORT 2012