RBS 2010 Annual Report Download - page 278

Payment services - this comprises income received for payment services
including cheques cashed, direct debits, Clearing House Automated
Payments (the UK electronic settlement system) and BACS payments
(the automated clearing house that processes direct debits and direct
credits). These are generally charged on a per transaction basis. The
income is earned when the payment or transaction occurs. Charges for
payment services are usually debited to the customer's account monthly
or quarterly in arrears. Income is accrued at period end for services
provided but not yet charged.
Card related services - fees from credit card business include:
xCommission received from retailers for processing credit and debit
card transactions: income is accrued to the income statement as the
service is performed;
xInterchange received: as issuer, the Group receives a fee
(interchange) each time a cardholder purchases goods and services.
The Group also receives interchange fees from other card issuers
for providing cash advances through its branch and automated teller
machine networks. These fees are accrued once the transaction has
taken place; and
xAn annual fee payable by a credit card holder is deferred and taken
to profit or loss over the period of the service i.e. 12 months.
Insurance brokerage - this is made up of fees and commissions received
from the agency sale of insurance. Commission on the sale of an
insurance contract is earned at the inception of the policy, as the
insurance has been arranged and placed. However, provision is made
where commission is refundable in the event of policy cancellation in line
with estimated cancellations.
Investment management fees - fees charged for managing investments
are recognised as revenue as the services are provided. Incremental
costs that are directly attributable to securing an investment management
contract are deferred and charged as expense as the related revenue is
recognised.
Insurance premiums - see Accounting policy 12.
4. Assets held for sale and discontinued operations
A non-current asset (or disposal group) is classified as held for sale if the
Group will recover the carrying amount principally through a sale
transaction rather than through continuing use. A non-current asset (or
disposal group) classified as held for sale is measured at the lower of its
carrying amount and fair value less costs to sell. If the asset (or disposal
group) is acquired as part of a business combination it is initially
measured at fair value less costs to sell. Assets and liabilities of disposal
groups classified as held for sale and non-current assets classified as
held for sale are shown separately on the face of the balance sheet.
The results of discontinued operations are shown as a single amount on
the face of the income statement comprising the post-tax profit or loss of
discontinued operations and the post-tax gain or loss recognised either
on measurement to fair value less costs to sell or on the disposal of the
discontinued operation. A discontinued operation is a cash-generating
unit or a group of cash-generating units that either has been disposed of,
or is classified as held for sale, and (a) represents a separate major line
of business or geographical area of operations, (b) is part of a single co-
ordinated plan to dispose of a separate major line of business or
geographical area of operations or (c) is a subsidiary acquired exclusively
with a view to resale.
5. Pensions and other post-retirement benefits
The Group provides post-retirement benefits in the form of pensions and
healthcare plans to eligible employees.
For defined benefit schemes, scheme liabilities are measured on an
actuarial basis using the projected unit credit method and discounted at a
rate that reflects the current rate of return on a high quality corporate
bond of equivalent term and currency to the scheme liabilities. Scheme
assets are measured at their fair value. Any surplus or deficit of scheme
assets over liabilities is recognised in the balance sheet as an asset
(surplus) or liability (deficit). The current service cost, curtailments and
any past service costs together with the expected return on scheme
assets less the unwinding of the discount on the scheme liabilities is
charged to operating expenses. Actuarial gains and losses are
recognised in full in the period in which they occur outside profit or loss
and presented in the consolidated statement of comprehensive income.
Contributions to defined contribution pension schemes are recognised in
the income statement when payable.
RBS Group 2010276
Accounting policies continued