3762
THE NEW ZEALAND GAZETTE
No. 138

Statement of Accounting Policies:

General Accounting Policies:

The measurement base adopted in the preparation of these Financial Statements is that of historical cost modified by the revaluation of land and buildings. Reliance has been placed on the fact that the bank is a going concern. Accrual accounting is used in the matching of expenses and revenue.

Particular Accounting Policies:

(a) Recognition of Investment Income—Interest on investments is accrued to balance date on a daily basis at the appropriate rate of interest.

(b) Depreciation—The cost or revalued amount of fixed assets (excluding land) is allocated over their economic lives on the straight line basis. The economic lives of the major classes are:

Buildings                          50–100 years
Computer and office equipment        7–10 years
Furniture and fittings               10 years
Motor vehicles                     5 years

(c) Investments—Investments are shown at cost with the exception of government securities and associate company investment.

(i) Government securities are normally held to maturity and redeemed at their face value.

Due provision is made for the difference between cost and face value by the amortisation of the discount or premium on purchase over the term of the security on a straight line basis.

(ii) The banks investment in Trusteebank Computer Ltd. an associate company, has been treated on an equity basis.

(d) Fixed Assets—Land and buildings are revalued annually and are recorded at a value which is 90 percent of independent registered valuation. Changes in valuations are transferred to the Property Revaluation Reserve.

(e) Taxation—Provision is made for taxation after taking advantage of all deductions available under current taxation legislation.

The liability method of accounting for the taxation effect of timing differences between the treatment of certain items for accounting purposes and their treatment for taxation has been adopted by the bank.

The major timing differences relate to depreciation and the recognition of investment income.

(f) Changes in Accounting Policies—There have been no significant changes in accounting policies.

NOTES TO THE FINANCIAL STATEMENTS

(1) Associate Company—The Bank’s investment in Trusteebank Computer Limited has been shown in the accounts according to the standard accounting practice adopted by the New Zealand Society of Accountants for an associate company.

The investment is made up as follows:

Debentures                         $ 662,750
Paid up shares                     997,000
Share of accumulated profit brought forward 138,380
Plus share of profit for year        174,943
Less share of provision for taxation 79,132
                                 95,811
Less dividend received             21,000
                                 74,811
Investment in associate company    $1,872,941

(2) Fixed Assets:

(3) Property Revaluation Reserve:

Balance brought forward              1986 $ 2,517,430
Current revaluation                  690,152
                                   3,207,582
                                   1985 $ 2,517,430

(4) New Zealand Government Stock:

Nominal Value                      1986 $ 54,210,928
Plus/less unamortised premiums/discounts  9,196
Balance sheet value                  54,220,124
Original cost                      54,221,617
Estimated market value               43,703,587
                                   1985 $ 67,584,202
                                   (655,487)
                                   66,928,715
                                   66,891,561
                                   55,764,925

The Government guarantee of depositors funds including accrued interest in terms of section 44 of the Trusteebanks Act 1983 and subsequent amendments was in force at balance date and continues to remain in force. However, the requirement to hold New Zealand Government securities pursuant to the same Act was removed on 11 February 1985.