Annual Report 1999 in PDF - Aer Lingus

AER LINGUS GROUP PLCStatement of Accounting Policies (continued)Useful lives and residual values are re-appraised regularly and currently fall in the following ranges:Useful lifeResidual value(Years) (%)Flight Equipment:Aircraft fleet and major spares- Fokker 50s 15 Nil- Other shorthaul aircraft 18 10- Longhaul aircraft 20 10Rotable spares 5 to 15 NilModifications to leased aircraft Period of lease NilDepreciable Property:Freehold Principally 50 NilLeasehold Period of lease NilEquipment:Ground equipment 3 to 20 NilOther 3 to 10 NilA proportion of the cost of owned aircraft, equivalent to the estimated cost of the next major airframe and engineoverhaul, is amortised over the period to the date of the next major maintenance check. The costs of major airframe andengine overhauls for owned aircraft are capitalised as part of the cost of the aircraft.Interest attributable to progress payments made in respect of aircraft is capitalised and added to the cost of the assetsconcerned. Capitalisation of interest ceases when the asset is placed in service.GHIFinancial Fixed AssetsInvestments in associated undertakings, where the Group has a long-term strategic interest, are recorded using the equitymethod of accounting under which the Group’s current year share of post-acquisition profits less losses is included in theprofit and loss account and added to the carrying value of the investments in the balance sheet. The results of suchassociated undertakings which were disposed of during the year are accounted for under the equity method up to theeffective date of disposal. Other investments in associated companies are recorded on the basis of dividends receivable.Interests in subsidiary undertakings are stated in the Company’s balance sheet at cost, less provision for any permanentimpairment in value.StocksStocks are stated at the lower of cost and net realisable value.Cost is based on average invoice price. Net realisable value is based on estimated normal selling price, less further costsexpected to be incurred to completion and disposal. Stocks which are known to be obsolete at the balance sheet dateare written off and provision is made in respect of stocks which may become obsolete in the future.Cash and Liquid ResourcesCash is defined as cash on hand together with deposits repayable on demand. Deposits repayable on demand aredefined as those which can be withdrawn at any time and without penalty or where a maturity or period of notice of notmore than 24 hours has been agreed.Liquid resources are defined as stores of value which are readily convertible into known amounts of cash at or close totheir carrying amount without curtailing or disrupting the business. They primarily consist of deposits held with a periodof notice greater than 24 hours.30