VAKIFBANK
2015 ANNUAL REPORT
240
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND
ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
XV. INFORMATION ON LEASING ACTIVITIES
Leasing activities
Risks and benefits on leasing activities that belongs to leasee is termed TAS 17- Leasing activities that belongs to financial leasing.
- Finance leasing activities as the lessee
Tangible assets acquired by way of finance leasing are recognized in tangible assets and the obligations under finance leases arising from the lease
contracts are presented under “Finance Lease Payables” account in the financial statements. In the determination of the related assets and liabilities,
the lower of the fair value of the leased asset and the present value of leasing payments is considered. Financial costs of leasing agreements are
expanded in lease periods at a fixed interest rate.
If there is an impairment in the value of the assets obtained through financial lease and in the expected future benefits, the leased assets are valued
with net realizable value. Provision for losses is calculated for decrease of the value of the assets that is obtained by this way. Depreciation for assets
obtained through financial lease, is calculated in the same manner as tangible assets.
- Finance leasing transactions as lessor
The rent amounts at the beginning of the finance leasing activities are recorded at “finance lease receivables” account in gross amounts comprising
the principal amounts and interests. The interest, the difference between the total of rent amounts and the cost of the fixed assets, is recorded
at “unearned income” account. As the rents are collected, “finance lease receivables” account is decreased by the rent amount; and the interest
component is recorded at consolidated income statement as interest income.
Operational leases
Operational leasing is defined as activities except from financial leasing. Operational leasing payments are recognized in equal payments as expense
under income statement during the leasing period.
XVI. INFORMATION ON PROVISIONS, CONTINGENT ASSETS AND LIABILITIES
Provisions other than the specific and general provisions set for loans and other receivables and provisory liabilities are accounted in accordance with
TAS 37 “Turkish Accounting Standard on Provisions, Contingent Liabilities and Contingent Assets Corresponding”.
In the financial statements, a provision is made for an existing commitment resulted from past events if it is probable that the commitment will be
settled and a reliable estimate can be made of the amount of the obligation. Provisions are calculated based on the best estimates of management
on the expenses to incur as at the balance sheet date and, if material, such expenses are discounted for their present values. If the amount is not
reliably estimated and there is no probability of cash outflow from the Group to settle the liability, the related liability is considered as “contingent” and
disclosed in the notes to the financial statements.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence
of unplanned or unexpected one or more uncertain future events not wholly within the control of the Group. Contingent assets are not recognized in
financial statements since this may result in the recognition of income that may never be realized. Contingent assets are assessed continually to ensure
that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits will
arise, the asset and the related income are recognized in the financial statements of the period in which the change occurs. If an inflow of economic
benefits has become probable, the Group discloses the contingent asset.
XVII. INFORMATION ON OBLIGATIONS OF THE GROUP CONCERNING EMPLOYEE RIGHTS
Reserve for employee termination benefits
In accordance with existing Turkish Labor Law, the Group is required to make lump-sum termination indemnities to each employee who has completed
one year of service with the Group and whose employment is terminated due to retirement or for reasons other than resignation or misconduct. The
computation of the liability is based upon the retirement pay ceiling announced by the Government. The applicable ceiling amount as at 31 December
2015 is TL 3,828 (full TL) (31 December 2014: TL 3,438 (full TL)).
The Group reserved for employee severance indemnities in the accompanying consolidated financial statements using actuarial method in compliance
with the TAS 19 – Employee Benefits.
