expenditure required to settle any financial obligation arising at the balance sheet date.
The exposure to potential losses associated with a financial guarantee is monitored periodically. When there is objective
evidence indicating probable losses, a provision is recognised for the financial guarantee.
2.20 Share capital and treasury shares
Ordinary shares and preference shares which do not result in the Group having a contractual obligation to deliver cash or
another financial asset, or to exchange financial assets or financial liabilities with the holder under conditions that are
potentially unfavourable to the Group, are classified as equity. Incremental external costs directly attributable to the issuance
of new shares are deducted against share capital.
When any entity within the Group purchases the Company’s ordinary shares “treasury shares”, the consideration paid
including any directly attributable incremental cost is presented as a component within equity, until they are cancelled, sold
or reissued.
When treasury shares are subsequently cancelled, the cost of the treasury shares is deducted against either the share
capital account or retained earnings. When treasury shares are subsequently sold or reissued, any realised gain or loss on
sale or reissue, net of any directly attributable incremental transaction costs and related income tax, is recognised in
capital reserves.
2.21 Dividend payments
Interim dividends are recorded during the financial year in which they are declared payable. Final dividends are recorded
during the financial year in which the dividends are approved by the shareholders at the Annual General Meeting.
2.22 Offsetting financial instruments
Certain financial assets and liabilities offset each other and the net amount is reported in the balance sheet when there is a
legally enforceable right to set off the recognised amounts and there is an intention to settle them on a net basis, or realise the
asset and settle the liability simultaneously.
2.23 Operating leases
Operating leases are charged to the income statement on a straight-line basis over the period of the lease. When an
operating lease is terminated before the lease period has expired, any payment that has to be made to the lessor is
recognised as an expense in the period the termination takes place.
2.24 Fiduciary activities
Assets and income belonging to a customer for whom the Group acts in a fiduciary capacity as nominee, trustee or agent,
are excluded from the financial statements.
3 EFFECTS ON FINANCIAL STATEMENTS ON
ADOPTION OF NEW OR REVISED FRS The Group has not applied the following FRS that have been
issued but are not yet effective. These newrevised standards will be adopted by the Group for annual periods commencing
on their effective dates as indicated below, and are not expected to have significant impact to the Group’s financial
statements. The adoption of FRS 112 Disclosure of Interests in Other Entities and FRS 113 Fair Value Measurement will create
additional disclosure requirements for the Group’s financial statements.
FRS 110 Consolidated Financial Statements effective 1 January 2013
FRS 110 establishes control as the basis for determining which entities are consolidated. It provides a single model to be
applied in the control analysis for all investees, including special purpose entities that are currently within the scope of INT FRS
12 Consolidation – Special Purpose Entities. Control exists under FRS 110 when the investor has power, exposure to
variable returns and the ability to use that power to affect its returns from the investee. FRS 110 also provides guidance on
how to apply the control principle, including circumstances involving de facto control and agency relationships, and
whether voting rights or rights other than voting are relevant in assessing control.
FRS 111 Joint Arrangements effective 1 January 2013 FRS 111 applies to all parties to a joint arrangement including
those who participate in, but do not have joint control of, a joint arrangement. The standard prescribes the accounting for
joint operations and joint ventures in both consolidated and separate financial statements. It requires that the type of joint
arrangement be determined based on the rights and obligations of the parties to the arrangement. Equity accounting is
mandatory for participants in joint ventures, while participants in joint operations are to account for its interest in assets,
liabilities, revenue and expenses.
FRS 112 Disclosure of Interests in Other Entities effective 1 January 2013
FRS 112 combines the existing disclosure requirements in a single disclosure standard. It requires the disclosure of
summarised financial information about each subsidiary that has material non-controlling interests as well as material
associate and joint venture. It also sets out new disclosure requirements such as financial or other support provided to
consolidated and unconsolidated structured entities, and
91 DBS Annual Report 2011
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2011
financial information about unconsolidated structured entities that the reporting entity had sponsored.
FRS 113 Fair Value Measurement effective 1 January 2013
FRS 113 defines fair value, establishes a framework for measuring fair value and sets out the disclosure requirements
for fair value measurements. It explains how to measure the fair value when it is required by other FRSs. It does not introduce
new fair value measurements, neither does it eliminate the practicability exceptions to fair value measurements that
currently exist in certain standards. FRS 113 defines fair value as a price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date i.e. an exit price.
Amendments to FRS 1 Financial Statement Presentation effective 1 July 2012
The amendments require entities to group items presented in other comprehensive income on the basis of whether they are
potentially recycled to the income statement reclassification adjustments. Where an entity presents its comprehensive
income in two separate statements, the amendments specifically require these statements to be presented
consecutively.
Amendments to FRS 12 Income Taxes effective 1 January 2012
The amendments introduce an exception to the existing principle for the measurement of deferred tax assets or liabilities
arising on investment property measured at fair value, where the presumption that the carrying amount of the investment
property will be recovered entirely by sale can be rebutted only if the investment property is depreciable and held within a
business model whose objective is to consume substantially all of the asset’s economic benefits over the life of the asset.
The amendments also incorporate into FRS 12 the remaining guidance previously contained in INT FRS 21 Income Taxes
– Recovery of Revalued Non-Depreciable Assets, which is withdrawn.
Amendments to FRS 107 Financial Instruments: Disclosures effective 1 July 2011
The amendments require additional disclosures for all transferred financial assets that are not derecognised in their
entirety, and those that are derecognised in their entirety but for which the transferor retains continuing involvement existing
at the reporting date, irrespective of when the related transfer transaction occurred. The amendments also clarify the
conditions under which an entity is deemed to transfer a financial asset.
4 CRITICAL ACCOUNTING ESTIMATES
The Group’s accounting policies and use of estimates are integral to the reported results. Certain accounting estimates
require exercise of management’s judgement in determining the appropriate methodology for valuation of assets and
liabilities. In addition, procedures are in place to ensure that methodologies are reviewed and revised as appropriate. The
Group believes its estimates for determining the valuation of its assets and liabilities are appropriate.
The following is a brief description of the Group’s critical accounting estimates involving management’s valuation
judgement.
4.1 Impairment allowances
