Page 48 - GTBank Annual Report 2020 eBook

(f) Fair value reserve interest rate. Transaction costs are incremental
costs that are directly attributable to the
acquisition, issue or disposal of a financial asset
3.16 Interest income and or liability.
expense
Interest income and expense presented in the
Interest income and expense for all interest-bearing Income statement include:
financial instruments are recognized in the income
statement within “interest income” and “interest Interest on financial assets and liabilities
expense” using the effective interest method. measured at amortized cost calculated
The calculation of the effective interest rate on an effective interest rate basis.
includes contractual fees and points paid or Interest on financial assets measured at
received transaction costs, and discounts or fair value through OCI calculated on an
premiums that are an integral part of the effective
effective interest rate basis.

3.17 Fees and commission

Income

Fees and Commission that are integral to the effective interest rate on a financial asset are included in the
measurement of the effective interest rate. Fees, such as processing and management fees charged for
assessing the financial position of the borrower, evaluating and reviewing guarantee, collateral and other
security, negotiation of instruments’ terms, preparing and processing documentation and finalizing the
transaction are an integral part of the effective interest rate on a financial asset or liability and are included
in the measurement of the effective interest rate of financial assets or liabilities.
Other fees and commissions which relates mainly to transaction and service fees, including loan account
structuring, management fees and legal fees are recognized as the related services are provided /
performed.

3.18 Net trading income

Net trading income comprises of gains and losses related to trading assets and liabilities, related interest
income or expense and it includes all realized and unrealized fair value changes, dividends and foreign
exchange differences.

3.19 Operating expenses

Expenses are decreases in economic benefits during the accounting year in the form of outflows, depletion
of assets or incurrence of liabilities that result in decrease of equity, other than those relating to distribution
to equity participants.
Expenses are recognized on an accruals basis regardless of the time of spending cash. Expenses are
recognized in the income statement when a decrease in future economic benefit related to a decrease in
an assets or an increase of a liability has arisen that can be measured reliably. Expenses are measured
at historical cost

3.20. Taxes

(i) Current tax

Tax is charged on the basis of the higher of 1% of gross income and 27% of tax adjusted accounting profits
in accordance with sections 79(3a,b) and first schedule of the Income and VAT Act 2012. For the year of
assessment 2020, tax has been provided on the basis of 27% of adjusted profits. Current income tax
relating to items recognized directly in other comprehensive income is recognized in other comprehensive
income respectively and not in the statement of profit or loss. Annual Report 2020

Guaranty Trust Bank Gambia Limited www.gtbankgambia.com 46