2898

THE NEW ZEALAND GAZETTE

No. 101

Accounting Policies—The accounting policies which the Bank
considers appropriate for the measurement of its results and
financial position under the historical cost method are as follows:

Recognition of income—Income shown in the profit and loss
account is earned in the current year and includes the amortisation
of premiums and discounts on the purchase of Government and
local authority stock. In the case of personal loans, the policy is to
add interest to the advance at the commencement of the loan, and
to bring this interest into revenue during the appropriate financial
years in accordance with the "Rule of 78".

Expenditure—Interest credited to depositors: Interest on savings
and current accounts represents interest credited at 31 March and
the interest paid on closed accounts during the year. Investment
Accounts which are credited with interest during the year have had
an appropriate adjustment made for the interest accrued to 31
March.

Other Expenses—Other expenses, including expenditure on
computer programme development are charged to the accounts
in the year in which the expenditure is incurred.

Depreciation—Fixed assets, other than freehold land, are
depreciated on a straight line basis at rates estimated to write off
the cost less residual value over the useful life of each class of
asset.

The principal annual rates in use are:

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 percent to 2.5 percent.
Office Furniture and Equipment . . . . . . . . . . 10 percent to 15 percent.

Taxation—Taxation charged against profits for the year is the
estimated expense for the year. Tax allocation accounting has been
adopted by the Bank for significant timing differences in respect
of accrued investment income, depreciation, capital profits and
losses, and amortisations of Government and local authority
stock purchases and sales.

Valuation of assets—current assets and investments: All current
assets and investments are shown at cost with the exception of
Government and Local Authority Stock. On the basis that this
stock will normally be held to maturity, from 1 April 1980 it has
been valued at cost adjusted by the amortisation of the discount or
premium on purchase, calculated on a yield basis, over the term of
the stock. The discount or premium is calculated after adjusting
for interest accrued in the purchase price. Prior to 1 April 1980,
Government and Local Authority Stock was recorded at face value.

In certain instances, low yielding Government stock has been
realised for tax purposes in switch arrangements and the stock so
purchased is shown at the cost of the original holding.

Changes in Accounting Policies—There is no change in the ac-
counting policy in comparison with the previous year.

Government and Local Authority Stock

The latest Government valuations of land and buildings, dated
from 31 July 1981, plus subsequent additions at cost, amount to
$4,600,000. Capital commitments outstanding at 31 March 1982
amount to $60,000 (1981 $760,000).

Taxation—Taxation due in respect of the current year is $45,640.
The charge for deferred taxation consists of taxation payable in
future years on timing differences arising through the amortisation
and the sale of stock $479,121, the increase in interest accrued
$9,068, depreciation $72,095 and other items $8,030.

STATEMENT OF SOURCE AND APPLICATION OF FUNDS

WESTLAND SAVINGS BANK
BALANCE SHEET AS AT 31 MARCH 1982