Air Canada 2006 Annual Report Download - page 53

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15. FUTURE ACCOUNTING STANDARD CHANGES
The Accounting Standards Board has issued three new standards dealing with financial instruments that the
Corporation will be required to adopt in future years:
(i) Financial Instruments — Recognition and Measurement;
(ii) Hedges;
(iii) Comprehensive Income.
The key principles under these standards are that all financial instruments, including derivatives, are to be
included on a company's balance sheet and measured, either at their fair values or, in limited circumstances
when fair value may not be considered most relevant, at cost or amortized cost. Financial instruments
intended to be held-to-maturity should be measured at amortized cost. Existing requirements for hedge
accounting are extended to specify how hedge accounting should be performed. Also, a new location for
recognizing certain unrealized gains and losses — other comprehensive income — has been introduced. This
provides the ability for certain unrealized gains and losses arising from changes in fair value to be temporarily
recorded outside the income statement but in a transparent manner. The new standards are effective for the
Corporation beginning January 1, 2007. The standards do not permit restatement of prior years' financial
statements however the standards have detailed transition provisions. The Corporation has evaluated the
consequences of the new standards, which may have a material impact on the Corporation's financial
statements. Refer to Note 16 to Air Canada’s combined consolidated financial statements for additional
disclosure on the consequences of the new standards.
53
Management's Discussion and Analysis of Results and Financial Condition