Air Canada 2006 Annual Report Download - page 116

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Proposed Accounting Policies
The Canadian Institute of Chartered Accountants Accounting Standards Board issued CICA 3855, Financial
Instruments – Recognition and Measurement, CICA 3865, Hedges, and CICA 1530, Comprehensive Income,
which will be applied by the Corporation for its fiscal years beginning on January 1, 2007. CICA 3855 prescribes
when a financial asset, financial liability or non-financial derivative is to be recognized on the balance sheet and
the measurement of such amount. It also specifies how financial instrument gains and losses are to be
presented. CICA 3865 is applicable for designated hedging relationships and builds on existing Canadian GAAP
guidance by specifying how hedge accounting is applied and what disclosures are necessary when it is applied.
CICA 1530 introduces new standards for the presentation and disclosure of components of comprehensive
income. Comprehensive income is defined as the change in net assets of an enterprise during a reporting
period from transactions and other events and circumstances from non-owner sources. It includes all changes
in net assets during a period except those resulting from investments by owners and distributions to owners.
When the Corporation adopts the new requirements on January 1, 2007, a new section of shareholders’ equity
called other comprehensive income will be presented. The new section will include gains and losses related to
the mark-to-market of investment securities and cash flow hedges.
The impact of measuring fuel hedging derivatives at fair value on January 1, 2007 will be recognized in opening
accumulated other comprehensive income.
The impact of measuring investment securities at fair value on January 1, 2007 will be recognized in opening
accumulated other comprehensive income.
Deferred financing costs within deferred charges will be adjusted to the carrying amount of the related long-term
debt and after initial recognition the related long-term debt will be amortized using an effective interest method.
The Corporation is currently considering further impacts related to the adoption of such standards on the
consolidated financial statements. Prior periods will not be restated for the impact of these new standards.
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