THE NEW ZEALAND GAZETTE

18 JULY

EASTERN AND CENTRAL TRUSTEEBANK

PROFIT STATEMENT FOR YEAR ENDED 31 MARCH 1985

Less Appropriations

| Provision for donations | 90,000 | 80,000 |
| Special reserve term and personal loans | 7,993 | 97,993 |
| Balance: Transferred to General Reserve | $1,017,288 | $784,959 |

NOTES TO THE ACCOUNTS

1. Statement of Accounting Policies:

(a) General Accounting Principles:

(i) The measurement base adopted is that of historical cost modified by the revaluation of certain assets. Reliance is placed on the fact that the bank is a going concern.

(ii) Accrual accounting is used to match expenses and revenues.

(b) Particular Accounting Principles—The following particular accounting principles which materially affect the measurement of profit and financial position have been applied:

(i) Interest Income—Interest is recognised on an accrual basis. Personal Loan interest excludes unearned interest, and has been apportioned according to the Rule of 78 method.

(ii) Fixed Assets—Fixed assets are valued at cost less accumulated depreciation with the exception of land and buildings which have been revalued to 90 percent of Professional Valuations.

Depreciation is provided on a straight line basis at rates that will write off the cost or valuation of the assets, less their estimated residual values, over their estimated useful lives. Land is not depreciated. The useful lives of the major classes of assets have been estimated as follows:

• Buildings: 40–50 years
• Furniture and fittings: 7–10 years
• Office equipment: 5–10 years
• Motor vehicles: 3 years to estimated residual value

(iii) Taxation—The charge for Income Tax is the amount of the tax liability in respect of the accounting profit for the year and includes both current and deferred tax. Deferred Taxation arises from timing differences between accounting and taxation recognition of income and expenditure. These differences relate to depreciation and investment income.

(iv) Current Assets—Debtors are valued at expected realisable value. Stock on Hand as shown in the Balance Sheet represents bulk stationery supplies valued at cost less a provision for obsolescence.

(v) Investments—Investments are shown at cost with the exception of Government and Local Authority Stocks. Government and Local Authority securities are regarded as long term investments and are redeemable on maturity at their face value. These securities are valued at cost, adjusted by the amortisation of the discount or premium on purchase spread over the term of the stock. The discount or premium is calculated after adjusting for interest accrued in the purchase price. In accordance with this policy the amortisation credited to revenue for this financial year amounts to $139,765 (1984, $155,088).

(c) Changes in Accounting Policies—There have been no changes in accounting policies that would have a material effect on the determination of profit for the year.

2. Investments:

Estimated market value of Government Securities as at 31 March 1985, $63,177,449. (March 1984, $64,369,254).

The realisable value of fixed interest securities fluctuates with movement in market yields. It is customary for such fluctuations to be disregarded in the reporting of the results of the long term institutional investor as stocks are generally held until dates of maturity.

The Government Guarantree of Depositors' Funds including accrued interest in terms of Section 44 of the Trustee Banks Act 1983 and subsequent amendments was in force at balance date and continues to remain in force. However, the requirements to hold New Zealand Government Securities pursuant to the same Act was removed on 11 February 1985.