İllİk hesabat annual RepoRt

OPEN JOINT STOCK COMPANY AMRAHBANK JOINT STOCK BANK 

 

NOTES TO THE FINANCIAL STATEMENTS (Continued) 

FOR THE YEAR ENDED 31 DECEMBER 2008 

(in Azerbaijan Manats) 

14 

 

 

Depreciation of property and equipment and amortization of intangible assets is charged on their 

historical cost and is designed to write off assets over their useful lives. Depreciation is calculated 

on a straight line basis at the following annual rates: 

 

Furniture and fixtures 

25% 

Computers and equipment 

25% 

Vehicles 

25% 

Other  

20% 

Intangible assets 

10% 

 

 

The carrying amounts of property, equipment and intangible assets are reviewed at each balance sheet 

date to assess whether they are recorded in excess of their recoverable amounts. The recoverable 

amount is the higher of fair value less costs to sell and value in use. Where carrying values exceed the 

estimated recoverable amount, assets are written down to their recoverable amount, an impairment is 

recognized in the respective period and is included in operating expenses. After the recognition of an 

impairment loss the depreciation charge for property, equipment and intangible assets is adjusted in 

future periods to allocate the assets’ revised carrying value, less its residual value (if any), on a 

systematic basis over its remaining useful life. 

 

Taxation 

 

Income tax expense represents the sum of the current and deferred tax expense.  

 

The current tax expense is based on taxable profit for the year.  Taxable profit differs from net profit 

as reported in the income statement because it excludes items of income or expense that are taxable 

or deductible in other years and it further excludes items that are never taxable or deductible.  The 

Bank’s current tax expense is calculated using tax rates that have been enacted or substantively 

enacted during the reporting period. 

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying 

amounts of assets and liabilities in the financial statements and the corresponding tax bases used in 

the computation of taxable profit, and is accounted for using the balance sheet liability method.  

Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred 

tax assets are recognized to the extent that it is probable that taxable profits will be available against 

which deductible temporary differences can be utilized. Such assets and liabilities are not 

recognized if the temporary difference arises from the initial recognition of other assets and 

liabilities in a transaction that affects neither the tax profit nor the accounting profit. 

 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the 

extent that it is no longer probable that sufficient taxable profits will be available to allow all or part 

of the asset to be recovered. 

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is 

settled or the asset is realized.  Deferred tax is charged or credited in the Bank income statement, 

except when it relates to items charged or credited directly to equity, in which case the deferred tax 

is also dealt with in equity. 

 

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OPEN JOINT STOCK COMPANY AMRAHBANK JOINT STOCK BANK 

 

NOTES TO THE FINANCIAL STATEMENTS (Continued) 

FOR THE YEAR ENDED 31 DECEMBER 2008 

(in Azerbaijan Manats) 

15 

 

 

Deferred income tax assets and deferred income tax liabilities are offset and reported net on the 

balance sheet if: 

 



  The Bank has a legally enforceable right to set off current income tax assets against current income 

tax liabilities: and 



  Deferred tax assets and the deferred income tax liabilities relate to income taxes levied by the same 

taxation authority on the same taxable entity. 

 

Azerbaijan also has various other taxes, which are assessed on the Bank’s activities. These taxes are 

included as a component of operating expenses in the income statement.  

 

Due to banks and other credit institutions and customer accounts 

 

Due to banks and other credit institutions and customer accounts are initially recognized at fair value. 

Subsequently amounts due are stated at amortized cost and any difference between carrying and 

redemption value is recognized in the income statement over the period of the borrowings using the 

effective interest method. 

 

Provisions 

 

Provisions are recognized when the Bank has a present legal or constructive obligation as a result of 

past events, and it is probable that an outflow of resources embodying economic benefits will be 

required to settle the obligation and a reliable estimate of the obligation can be made.  

 

Financial guarantee contracts issued and letters of credit  

 

Financial guarantee contracts and letters of credit issued by the Bank provide for specified payments 

to be made in order to reimburse the holder for a loss it incurred that payments are made when a 

specified debtor fails to make payment when due under the original or modified terms of a debt 

instrument. Such financial guarantee contracts and letters of credit issued are initially recognized at 

fair value. Subsequently they are measured at the higher of (a) the amount recognized as a provision 

in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”; and (b) the 

amount initially recognized less (where appropriate) cumulative amortization of initial premium 

revenue received over financial guarantee contract or the letter of credit issued. 

 

Contingencies 

 

Contingent liabilities are not recognized in the balance sheet but are disclosed unless the possibility 

of any outflow in settlement is remote. A contingent asset is not recognized in the balance sheet but 

disclosed when an inflow of economic benefits is probable. 

 

Share capital and share premium 

 

Share capital is recognized at cost. Share premium represents the excess of contributions over the 

nominal value of the shares issued.  

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