2002 Annual Report - Turkish Airlines

2002 • 53TURKISH AIRLINES INC.NOTES TO THE FINANCIAL STATEMENTS / continued(Unless otherwise is stated TL amounts are in Million TL, foreign currency amounts appear in full)10- Balances with shareholders, equity participations and subsidiaries of the Company:31.12.2002ReceivablesPayablesTrade Non Trade Trade Non Trade1) ShareholdersTurkish Republic Privatization Administration - 10,240,960 - -2) SubsidiarySun Ekspress A.fi. 1,007,121 - 112,104 -3) Equity ParticipationsUçak Servisi A.fi. (USAfi) 7,044 - 5,258,468 -31.12.2001ReceivablesPayablesTrade Non Trade Trade Non Trade1) Shareholders - - - -2) Subsidiary - - - -Sun Ekspress A.fi. 204,489 - 83,690 -3) Equity ParticipationsQualiflyer - 27,487 - -11- Valuation methods applied on the balance sheet items, inventory and depreciation methods and change in the accounting policies compared tothe previous periods is as follows:a) Income Accrual: During 2001, passenger fares and cargo fees are recorded as income when the sales take place in the Company’s bureaus, by theend of month when the sales take place in IATA agencies, and for other agencies, it is according to predetermined reporting period in the month thatthe sales take place and informed to the Company.The Company has completed the necessary information technology infrastructure at the end of 2002 and started to recognize passenger and cargofares as operating revenue when the transportation is provided as many of the airline companies throughout the world is doing pursuant to the accrualbasis of accounting principle of Generally Accepted Accounting Principles. Tickets sold but not yet used are recorded as advance ticket sales.Commissions to agencies relating to the passenger revenue are recognized as expense, based on estimations, when the transportation is provided.Commission on tickets sold in advance is recorded as prepaid expenses in the current assets. The Company develops estimations using historical statisticsand data to estimate unredeemed tickets and they are recognized as operating revenue.The Company calculated the effect of above change to flight basis accounting on 31 December 2002 profits as TL 39,972,081 and recorded this amountto prior periods expenses under extraordinary expenses.b) Marketable securities: Marketable securities are equity shares that are traded in foreign stock exchanges. The Company valued those shares with theweighted average market price at the last five business day before balance sheet date.c) Inventories: Inventories are stated based on the lower of acquisition cost and net realizable value. Cost is determined by the moving weighted averagemethod.d) Long-Term Financial Assets: Subsidiaries and deposit certificates given by SITA INC. are stated with their cost plus nominal values of free sharesreceived. Investments portfolio are stated with acquisition cost. Equity participation obtained free of charge is recorded at market value at the acquisitiondate.Equity participations traded in stock exchanges and other organized markets are valued with the weighted average market price at the last five businessday before balance sheet date.e) Tangible Fixed Assets: Tangible fixed assets are revalued with the revaluation coefficient determined by Finance Ministry of Turkish Republic (exceptlands and components on machineries, installations, and equipments). Tangible fixed assets are subject to depreciation according to straight-linedepreciation method over their revalued value.Rights included at the intangible fixed assets and the other intangible fixed assets are depreciated within 5 years on straight line basis.