annual report 2009 - Aer Lingus

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60 Financial Statements Aer Lingus Group Plc – Annual Report 2009Notes to the Consolidated Financial Statements [continued]2 Summary of significant accounting policies [continued]2.12 InventoriesInventories are stated at the lower of cost and net realisable value. Cost is determined using weighted average cost. Net realisablevalue is the estimated selling price in the ordinary course of business, less applicable disposal costs.2.13 Trade receivablesTrade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method,where appropriate, less provision for impairment.A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collectall amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that thedebtor will reject charges and default or delinquencies in payments are considered indicators that the trade receivable is impaired.The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated cash flows,discounted at the effective interest rate. The carrying amount of the assets is reduced through the use of an allowance accountand the amount of the loss is recognised within the income statement within ‘ground operations, catering and other operating costs’.When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveriesof amounts previously written off are credited against the same account in the income statement.2.14 Cash and cash equivalents and depositsCash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments withoriginal maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilitieson the statement of financial position.Deposits comprise short and medium-term deposits. Given that the maturities of these investments fall outside the three monthtimeframe for classification as cash and cash equivalents under IAS 7 Statement of Cash Flows, the related balances have beenclassified as ‘deposits’.2.15 Share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shownin equity as a deduction, net of tax, from the proceeds.Where any group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directlyattributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the sharesare cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributableincremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.2.16 Trade payablesTrade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of thebusiness if longer). If not, they are presented as non-current liabilities.Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Financial Statements Aer Lingus Group Plc – Annual Report 2009612 Summary of significant accounting policies [continued]2.17 BorrowingsBorrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost.Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement overthe period of the borrowings using the effective interest method.Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least12 months after the end of the reporting period.2.18 Current and deferred income taxThe tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extentthat it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in othercomprehensive income or directly in equity, respectively.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financialposition date in the countries where the group companies operate and generate taxable income. Management periodically evaluatespositions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishesprovisions where appropriate on the basis of amounts expected to be paid to the tax authorities.Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets andliabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accountedfor if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of thetransaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that havebeen enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferredincome tax asset is realised or the deferred income tax liability is settled.Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against whichthe temporary differences can be utilised.Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the Groupcontrols the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in theforeseeable future.Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against currenttax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authorityon either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.The tax effects of income tax losses available for carry forward are recognised as an asset when it is probable that future taxableprofits will be available against which these losses can be utilised.2.19 Employee benefits(a) Pension obligationsThe Group companies operate various pension schemes. The schemes are generally funded through payments to trustee-administeredfunds. The Group contributes to defined contribution plans. A defined contribution plan is a pension plan under which the Group paysfixed contributions into a separate entity and the Group has no legal or constructive obligations to pay further contributions if the funddoes not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
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annual report 2009
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Financial HighlightsFor the year en
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Chairman’s Statement Aer Lingus G
Page 11 and 12: Operating and Financial Review Aer
Page 13 and 14: Board of Directors Aer Lingus Group
Page 15 and 16: Corporate Social Responsibility Sta
Page 29 and 30: Directors’ Report Aer Lingus Grou
Page 35: Directors’ Report Aer Lingus Grou
Page 38 and 39: 36 Directors’ Report Aer Lingus G
Page 41 and 42: Remuneration Committee Report Aer L
Page 43 and 44: Remuneration Committee Report Aer L
Page 45 and 46: Independent Auditors’ Report Aer
Page 47 and 48: Financial Statements Aer Lingus Gro
Page 61: Financial Statements Aer Lingus Gro
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annual report 2009 - Aer Lingus

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