Annual report 2008-OK-B-up.qxp - Canadia Bank Plc.

NOTES TO THE FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.11 Property and equipment (continued)
Buildings - straight-line 5%
Motor vehicles - declining 25%
Office equipment and furniture - 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 carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds within the carrying amount and
are recognised in the income statement.
2.12 Computer software
Acquired computer software licences are capitalised on the basis of the cost incurred to acquire the
specific software and bring it to use. These costs are amortised over a two-year period using the declining
balance method.
Costs associated with developing or maintaining computer software programs are recognised as an
expense as incurred.
2.13 Impairment of non-financial assets
Assets that have indefinite useful lives are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment
whenever 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 its
recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identified cash flows (cash-generating units). Non-financial assets other than goodwill
that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
2.14 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases are charged to the income statement
on a straight-line basis over the period of the lease.
2.15 Provision
Provisions are recognised when: the Bank has a present legal or constructive obligation as a result of past
events; it is probable that an outflow of resources will be required to settle the obligation; and the amount
has been reliably estimated.
When there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised even
if the likelihood of an outflow with respect to any one item included in the same class of obligations may
be small.
Provisions are measured at the present value of the expenditure expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and
the risks specific to the obligation. The increase in the provision due to the passage of time is recognised
as interest expense.
Annual Report 2008 35