Bahamas - FirstCaribbean International Bank

FIRSTCARIBBEAN INTERNATIONAL BANK (BAHAMAS) LIMITEDNotes to Consolidated Financial StatementsOctober 31, 2002(expressed in thousands of Bahamian dollars)2 Significant accounting policies...continuedAcceptancesThe Bank’s potential liability under acceptances is reported as a liability in the consolidated balancesheet. The recourse against the customer in the event of a call on any of these commitments is reportedas a corresponding asset of the same amount.GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the Bank’s share ofthe net assets of the acquired subsidiary undertaking at the date of acquisition. Goodwill onacquisitions of subsidiaries is reported in the balance sheet as an intangible asset and is amortised usingthe straight-line method over its estimated useful life of 20 years.The carrying amount of goodwill is reviewed when circumstances or events indicate that there may beuncertainty over the carrying amount and written down for impairment where the net present value ofthe forecast future cash flows of the business are insufficient to support the carrying value.Computer software development costsCosts associated with maintaining computer software programmes are recognized as an expense asincurred. However, expenditure that enhances or extends the benefits of computer softwareprogrammes beyond their original specifications and lives is recognized as a capital improvement andadded to the original cost of the software. Computer software development costs recognized as assetsare amortized using the straight-line method over a five year period.Property, plant and equipmentAll property, plant and equipment are stated at historical cost less accumulated depreciation.Depreciation is computed on the straight line method at rates considered adequate to write-off the costof depreciable assets, less salvage, over their useful lives.The annual rates used are:Freehold buildings 2%Leasehold improvements 10%Equipment, vehicles and furniture 20%Where the carrying amount of an asset is greater than its estimated recoverable amount, it is writtendown immediately to its recoverable amount. Gains and losses on disposal of property and equipmentare determined by reference to its recoverable amount and are taken into account in determiningoperating income.57