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ECCB ANNUAL REPORT 2016/2017
EASTERN CARIBBEAN CENTRAL BANK
NOTES TO THE FINANCIAL STATEMENTS
(expressed in Eastern Caribbean dollars)
March 31, 2017
Eastern Caribbean Central Bank
Notes to the Financial Statements
March 31, 2017
(expressed in Eastern Caribbean dollars)
2. Summary of significant accounting policies
…continued
f)
Financial assets and liabilities
Financial assets
In accordance with IAS 39, all financial assets and liabilities
–
which include derivative financial
instruments
–
are recognised in the statement of financial position and measured in accordance
with their assigned category.
The Bank allocates financial assets to the following three categories: financial assets at fair value
through profit or loss; loans and receivables; and available-for-sale financial assets. Management
determines the classification of its financial assets at initial recognition.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A
financial asset is classified in this category if acquired
or incurred
principally for the purpose
of selling in the short-term. Derivatives are also categorised as held for trading unless they are
designated as hedging instruments. Assets in this category are classified as current assets as
they are expected to be settled within 12 months. They are recognized in the statement of
financial position as “Financial assets held for trading”.
Financial instruments included in this category are recognized initially at fair value;
transaction costs are taken directly to the statement of profit or loss. Gains and losses arising
from changes in fair value are included directly in the statement of profit or loss. The
instruments are derecognized when the rights to receive cash flows have expired or the Bank
has transferred substantially all the risks and rewards of ownership and the transfer qualifies
for derecognition.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market, other than: (a) those that the Bank upon
initial recognition designates as available-for-sale; or (b) those for which the Bank may not
recover substantially all its initial investment, other than because of credit deterioration.
Loans and receivables are initially recognised at fair value - which is the cash consideration to
originate or purchase the loan including any transaction costs - and measured subsequently at
amortised cost using the effective interest method. Interest on loans and receivables are
included in the statement of profit or loss
and is reported as “interest income”. In the case of
impairment, the impairment loss is reported as a deduction from the carrying value of the loan
and receivables and recognised in the statement of profit or loss. Loans and receivables are
measured at amortised cost.