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2. Material accounting policies (continued)
2.6 Summary of material accounting policies (continued)
o Business combinations and goodwill (continued)

If the business combination is achieved in stages, any previously held equity interest is remeasured at its acquisition
date fair value and any resulting gain or loss is recognised in the Consolidated statement of income.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets
acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration
transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities
assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration
transferred, then the gain is recognised in the Consolidated statement of income.

As at acquisition date, any goodwill acquired is allocated to each of the CGUs expected to benefit from the
combination’s synergies. After initial recognition, goodwill is measured at cost less any accumulated impairment
losses.

Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that
the carrying value may be impaired.

Impairment is determined by assessing the recoverable amount of the CGU, to which goodwill relates. Where the
recoverable amount of the CGU is less than the carrying amount, an impairment loss is recognised. Impairment
losses relating to goodwill cannot be reversed in future periods.

The Group has elected to apply the book value method of accounting for the acquisition of subsidiaries under
common control on the condition that the accounting policies of the combining entities and the parent are aligned.
The acquisition of a subsidiary under common control is one in which the combining entities are ultimately controlled
by the same parent, both before and after the acquisition. All acquired assets and liabilities are accounted for at book
value at the date of acquisition including the transfer of any existing goodwill. No new goodwill can be generated
in the acquisition of subsidiaries under common control. Impairment of any acquired goodwill is determined by
assessing the recoverable amount of the merged cash generating unit post-acquisition.

p Employee benefits
i Pension obligations
The Group operates defined benefit plans, the assets of which are generally held in separate trustee-administered
funds. The pension plans are generally funded by payments from the relevant Group companies, taking account
of the recommendations of independent qualified actuaries who carry out the full valuation of the Plans every
three years. In Trinidad, Republic Bank Limited took the actuary’s advice regarding a pension holiday, effective
January 1999.

Annually, the Group’s independent actuaries conduct a valuation exercise to measure the effect of all employee
benefit plans.