FirstCaribbean International Bank (Bahamas) Limited

Notes to Consolidated Financial StatementsFor the year ended October 31, 2009(Expressed in thousands of Bahamian dollars)2. Accounting Policies (Continued)2.4 Summary of Significant Accounting Policies (continued)(11) GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of theacquired subsidiary undertaking at the date of acquisition and is reported in the consolidated balance sheet as anintangible asset. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.Goodwill is allocated to lowest levels for which there are separately identifiable cash flows (cash-generating units) forthe purpose of impairment testing. An impairment loss is recognized for the amount by which the asset’s carryingvalue exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to selland value in use.(12) Property and equipmentLand and buildings comprise mainly branches and offices. All property and equipment are stated at historical costless accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition ofthe items. Changes in the expected useful life are accounted for by changing the amortization period or method, asappropriate, and treated as changes in accounting estimates.Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate,only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost ofthe item can be measured reliably. All other repairs and maintenance are charged to the consolidated statement ofincome during the financial period in which they are incurred.Land is not depreciated. Depreciation on other assets is computed using the straight-line method at rates consideredadequate to write-off the cost of depreciable assets, less salvage, over their useful lives.The annual rates used are:- Buildings 2½%- Leasehold improvements 10% or shorter life of the lease- Equipment, furniture and vehicles 20 – 50%Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. Where the carrying amount of an asset is greater thanits estimated recoverable amount, it is written down immediately to its recoverable amount. The asset’s recoverableamount is the higher of the asset’s fair value less costs to sell and the value in use.Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are recognized in‘other operating income’ or ‘other operating expenses’ within the consolidated statement of income.(13) LeasesOperating lease payments are recognised as an expense on a straight-line basis over the lease term and included in‘other operating expenses.’(14) ProvisionsProvisions are recognized when the Bank has a present legal or constructive obligation as a result of past events, it ismore than likely that an outflow of resources embodying economic benefits will be required to settle the obligation,and a reliable estimate of the amount of the obligation can be made.30