Aer Lingus 2010 Annual Report Download - page 55

Financial Statements Aer Lingus Group Plc – Annual Report 2010 53
2 Summary of signifi cant accounting policies (continued)
2.2 Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the fi nancial and operating
policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisitions of subsidiaries by the Group. The cost of an acquisition is measured
as the fair value of the assets given. Equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifi able assets
acquired and liabilities and contingent liabilities assumend in a business combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the
Group’s share of the identifi able net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net
assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Inter-company transactions balance and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The fi nancial statements of all subsidiaries are drawn up to the year ended 31 December. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
2.3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identifi ed as Christoph Mueller.
2.4 Foreign currency translation
(a) Functional and presentation currency
The consolidated fi nancial statements are presented in euro, which is the functional and presentation currency of the Company and all of its
trading subsidiaries.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions
or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement, except when deferred in equity as qualifying cash fl ow hedges.
2.5 Property, plant and equipment
All property, plant and equipment is stated at cost or deemed cost less depreciation. Cost includes expenditure that is directly attributable
to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash fl ow hedges 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 is probable that
future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably. All other repairs
and maintenance are charged to the income statement during the fi nancial period in which they are incurred.