Aer Lingus 2011 Annual Report Download - page 73

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FINANCIAL STATEMENTS Aer Lingus Group Plc
Notes to the consolidated financial statements (continued)
Annual Report 2011 71
2.7 Impairment of non-financial assets
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. For the purpose of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Non-financial assets
that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
2.8 Financial assets
2.8.1 Classification
The Group classifies its financial assets in the following categories: loans and receivables and financial assets at fair value through profit or
loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification
of its financial assets at initial recognition.
(a) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed 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 classified as non-current assets.
(b) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified 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 classified as current assets if expected to be settled within 12 months; otherwise,
they are classified as non-current.
2.8.2 Recognition and measurement
Regular purchases and sales of financial 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 financial assets not carried at fair value through
profit or loss. Financial assets carried at fair value through profit 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 flows from the investments have
expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale
financial assets and financial assets at fair value through profit 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 ‘financial assets at fair value through profit or loss’ category are presented in
the income statement within ‘other (losses)/gains – net’ in the period in which they arise.
Changes in the fair value of monetary securities denominated in a foreign currency and classified 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 profit 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 classified as
available-for-sale are recognised in other comprehensive income.
2.9 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally
enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the
liability simultaneously.