Aer Lingus 2008 Annual Report Download - page 60

AER LINGUS GROUP PLC - ANNUAL REPORT 2008
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Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal
of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax related to fair value remeasurement of available-for-sale investments and cash flow hedges, which are charged or
credited directly to equity, is also credited or charged directly to equity and is subsequently recognised in the income statement
together with the deferred gain or loss.
The tax effects of income tax losses available for carry forward are recognised as an asset when it is probable that future taxable
profits will be available against which these losses can be utilised.
2.15 Employee benefits
Pension obligations
The Group companies operate various pension schemes. The schemes are generally funded through payments to trustee
administered funds. A defined contribution scheme is a pension scheme under which the Group pays fixed contributions into
a separate fund and the Group has no legal or constructive obligations to pay further contributions if the fund does not hold
sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
For defined contribution schemes, the Group pays contributions into the pension schemes in accordance with the trust deed. The
Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee
benefit expenses when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a
reduction in the future payments is available.
Long Term Incentive Plan
The Group operates an equity-settled, Share based compensation plan. The fair value of employee services received in exchange
for the issue of an award is recognised as an expense. The total amount to be expensed over the vesting period is determined by
reference to the fair value of the award issued at the date of the award, excluding the impact of any non-market vesting conditions.
Non-market vesting conditions are included in assumptions about the number of shares that are expected to vest. At each
balance sheet date, the Group revises its estimates of the number of shares that are expected to vest. The Group recognises the
impact of the revision to original estimates, based on changes in the performance of market or non-market vesting conditions, if
any, in the income statement, with a corresponding adjustment to equity.
The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share
premium.
Employee profit sharing scheme
The Group recognises a liability and an expense for the employee profit share scheme, based on a formula that takes into
consideration the profit attributable to the parent’s shareholders after certain adjustments. The expense is identified as a separate
item in the income statement.
2.16 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely
than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions
are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as interest expense.
Provisions are made on a monthly basis for aircraft maintenance costs, which the Group incurs in connection with major airframe
and engine overhauls on operating leased aircraft, where the terms of the lease impose obligations on the lessee to have these
overhauls carried out. Provisions for costs to meet the contractual return conditions on these aircraft are also included. The actual
cash outflow of the overhauls is charged against the provision when incurred. Any residual balance is transferred to the income
statement. If aircraft leases expire and the aircraft pass into Group ownership, the related maintenance provisions are transferred
Basis of Preparation and Statement of
Accounting Policies continued