217
Financial Information and Risk
Management
İş Bankası
Annual Report 2013
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Consolidated Financial Statements
for the Year Ended 31 December 2013
The depreciation rates used in amortization of tangible assets and their estimated useful lives are as follows:
Estimated Economic Life (Year)
Depreciation Rate
Buildings
4-50
2%-25%
Safe Boxes
2-50
2%-50%
Other Movables
2-25
4%-50%
Leased Assets
4-15
6.66%-25%
XIV. Investment Property
Investment property is kind of property which is held by the Group to earn rent. These are listed in the attached consolidated
financial statements at acquisition costs less accumulated amortization and impairment provisions. The accounting policies
mentioned for tangible assets are also valid for investment property.
XV. Leasing Transactions
Assets acquired under financial leases are carried at the lower of their fair values or amortized value of the lease payments. Leasing
payables are recognized as liabilities in the balance sheet while the interest payable portion of the payables is recognized as a
deferred amount of interest. Finance lease payments are separated as financial expense and principal amount payment, which
provides a decrease in finance lease liability, thus helps a fixed rate interest on the remaining principal amount of the debt to be
calculated. Within the context of the Group’s general borrowing policy, financial expenses are recognized in the income statement.
Assets held under financial leases are recognized under the property, plant and equipment (movable properties) account and are
depreciated by using the straight line method.
There is one company which exclusively does finance leases (İş Finansal Kiralama A.Ş.) and one bank (Türkiye Sınai Kalkınma Bankası
A.Ş.) which operates finance lease activities as per provisional article No 4 of the Banking Law No 5411. Finance lease activities are
operated according to the “Law on Financial Leasing, Factoring and Financing” No 6361.
In cases when the Group is the “lessor”, finance lease receivables are recognized by their fair values on the first entry date and in the
reporting periods after the first entry date they are carried at amortized cost by using the effective interest rate method. Interest
income on finance lease is allocated to the accounting periods in order to reflect a fixed term interest from the investments that are
subject to leasing.
Operational lease transactions are recognized in line with the related agreement on an accrual basis.
XVI. Insurance Technical Income and Expense
In insurance companies premium income is obtained subsequent to the share of reinsurers in policy income is diminished.
Claims are recorded in expense as they are reported. Outstanding loss provisions are recognized for the claims reported but not
paid yet and for the claims that incurred but not reported. Reinsurers’ share of claims paid and outstanding loss are offset in these
provisions.
XVII. Insurance Technical Reserves
Effective 1 January 2005, the Group’s insurance subsidiaries adopted TFRS 4, Insurance Contracts (“TFRS 4”). TFRS 4 represents
the completion of phase I and is a transitional standard until the recognition and measurement of insurance contracts has more
fully addressed. TFRS 4 requires that all contracts issued by insurance companies be classified as either insurance contracts or
investment contracts. Contracts with significant insurance risk are considered insurance contracts. Insurance risk is defined as
risk, other than financial risk, transferred from the holder of a contract to the issuer. TFRS 4 permits a company to continue with
its previously adopted accounting policies with regard to recognition and measurement of insurance contracts. Only in case of
presentation of more reliable figures a change in accounting policy shall be carried out. Contracts issued by insurance companies
without significant insurance risk are considered investment contracts. Investment contracts are accounted for in accordance with
TAS 39 “Turkish Accounting Standard for Financial Instruments: Recognition and Measurement”.
Within the framework of the current insurance regulation, reserves accounted by insurance companies for unearned premium
claims, unexpired risk reserves, outstanding claims and life-mathematical reserves are presented in the consolidated financial
statements.
