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Financial Statements Aer Lingus Group Plc – Annual Report 2010 55
2 Summary of signifi cant accounting policies (continued)
2.8 Financial assets
2.8.1 Classifi cation
The Group classifi es its fi nancial assets in the following categories: loans and receivables and fi nancial assets at fair value through profi t or
loss. The classifi cation depends on the purpose for which the fi nancial assets were acquired. Management determines the classifi cation of its
fi nancial assets at initial recognition.
(a) Loans and receivables
Loans and receivable are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market.
They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classifi ed
as non-current assets.
(b) Financial assets at fair value through profi t or loss
Financial assets at fair value through profi t or loss are fi nancial assets held for trading. A fi nancial asset is classifi ed in this category
if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are
designated as hedges. Assets in this category are classifi ed as current assets if expected to be settled within 12 months; otherwise,
they are classifi ed as non-current.
2.8.2 Recognition and measurements
Regular purchases and sales of fi nancial assets are recognised on the trade-date – the date on which the Group commits to purchase or sell
the asset. Investments are initially recognised at fair value plus transactions costs for all fi nancial assets not carried at fair value through
profi t or loss. Financial assets carried at fair value through profi t or loss are initially recognised at fair value, and transactions costs are
expensed in the income statement. Financial assets are derecognised when the rights to receive cash fl ows from the investments have
expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale fi nancial
assets and fi nancial assets at fair value through profi t or loss are subsequently carried at fair value. Loans and receivables are subsequently
carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the ‘fi nancial assets at fair value through profi t or loss’ category are presented in the
income statement within ‘other (losses)/gains – net’ in the period in which they arise. Dividend income from fi nancial assets at fair value
through profi t or loss is recognised in the income statement as part of other income when the group’s right to receive payments is
established.
Changes in the fair value of monetary securities denominated in a foreign currency and classifi ed as available-for-sale are analysed between
translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security.
The translation differences on monetary securities are recognised in profi t or loss; translation differences on non-monetary securities are
recognised in other comprehensive income. Changes in the fair value of monetary and non-monetary securities classifi ed as available-for-sale
are recognised in other comprehensive income.