annual report 2009 - Aer Lingus

56 Financial Statements Aer Lingus Group Plc – Annual Report 2009Notes to the Consolidated Financial Statements [continued]2 Summary of significant accounting policies [continued]2.5 Property, plant and equipmentAll property, plant and equipment is stated at cost or deemed cost less depreciation. Cost includes expenditure that is directlyattributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flowhedges of foreign currency purchases of property, plant and equipment.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it isprobable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measuredreliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to theirresidual values over their estimated useful lives as follows:Useful livesResidual valuesFlight equipmentAircraft fleet and major spares– short haul aircraft 18 years 10% residual value– long haul aircraft 20 years 10% residual valueRotable spares 5-11 years NilModifications to leased aircraft Period of lease NilPropertyFreehold Principally 50 years NilLeasehold Period of lease NilEquipmentGround equipment 3-20 years NilOther equipment 2-10 years NilThe assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’scarrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimatedrecoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount.The costs of major airframe and engine maintenance checks on owned and finance leased aircraft are capitalised and depreciatedover the shorter of the period to the next check or the remaining life of the aircraft. On acquisition of new owned or finance leasedaircraft, the expected cost of initial major airframe and engine maintenance checks is separately identified and depreciated over theshorter of the period to the next check or the remaining life of the aircraft.2.6 Intangible assetsAcquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.These costs are amortised over their estimated useful lives (three to five years) on a straight line basis. Costs that are directly associatedwith the production of identifiable and unique software products controlled by the Group, and that will probably generate economicbenefits exceeding costs beyond one year, are recognised as intangible assets. Computer software development costs recognised asassets are amortised over their estimated useful lives (not exceeding three years) on a straight line basis.Other costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred.2.7 Impairment of non-financial assetsAssets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceedsits recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. For the purposeof assessing impairment, assets are grouped at the lowest levels for which there are separately indentifiable cash flows (cash-generatingunits). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.