40 (Expressed in Trinidad and Tobago Dollars) NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS 30th June 2017 4 Summary of significant accounting policies (continued) e. Financial assets (continued) (i) Financial assets at fair value through profit or loss (continued) Held for trading securities are initially recognised at cost and subsequently remeasured at fair value based on quoted bid prices at the reporting date. Where the instrument is not actively traded or quoted on an active market, fair value is determined using discounted cash flow analysis. Gains and losses arising from sales and changes in fair values of these financial assets are recognised in the statement of comprehensive income in the period in which they arise. All related unrealised gains and losses are included in the statement of comprehensive income. Interest earned is reported as interest income. (ii) Loans and advances Loans and advances are financial assets with fixed or determinable payments and are not quoted in an active market created by NIBTT providing money to a debtor other than those created with the intention of short-term profit sharing. Such assets are stated at amortised cost, net of any advances for credit losses using the effective interest method. Loans and advances include mortgage advances. Mortgage advances are measured net of provisions for impairment. A mortgage advance is classified as impaired (non- performing) when there is objective evidence that NIBTT will not be able to collect all amounts due according to the original contractual terms of the loan. Objective evidence of impairment includes observable data that comes to the attention of NIBTT such as: • Significant financial difficulties of the borrower • Actual delinquencies • Adverse change in the payment status of a borrower • Bankruptcy or reorganisation by the borrower. If there is objective evidence that an impairment loss on mortgage advance has been incurred, the amount of the allowance for impairment is measured as the difference between the carrying amount and the recoverable amount, being the present value of expected future cash flows, including amounts recoverable from guarantees and collateral, discounted at the original effective interest rate of loans. The allowance which is made during the year, less amounts released and recoveries of bad debts previously written off, is charged against the revenue and expenditure accounts. When a loan is deemed uncollectible, it is written off against the related allowance for losses. f. Impairment of financial assets The carrying amounts of NIBTT’s assets that are not carried at fair value, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated and an impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income.