Air Canada 2008 Annual Report Download - page 101

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Consolidated Financial Statements and Notes
101
O) CASH AND CASH EQUIVALENTS
Cash includes $416 pertaining to investments with original maturities of three months or less at December 31, 2008 (2007
- $411). Investments include bankers’ acceptances and bankers’ discount notes, which may be liquidated promptly and have
original maturities of three months or less. The weighted average interest rate on investments as at December 31, 2008 is
2.06% (2007 - 4.68%).
P) SHORT-TERM INVESTMENTS
Short-term investments, comprised of bankers’ acceptances and bankers’ discount notes, have original maturities over three
months, but not more than one year. The weighted average interest rate on Short-term investments as at December 31, 2008
is 2.90% (2007 - 4.61%).
Q) RESTRICTED CASH
The Corporation has recorded $45 (2007 - $124) in Restricted cash, under Current assets, representing funds held in trust
by Air Canada Vacations in accordance with regulatory requirements governing advance ticket sales, recorded under Current
liabilities, for certain travel related activities.
Restricted cash with maturities greater than one year from the balance sheet date is recorded in Deposits and other assets.
This restricted cash relates to funds on deposit with various financial institutions as collateral for letters of credit and other
items.
R) AIRCRAFT FUEL INVENTORY
Effective January 1, 2008, the Corporation adopted CICA section 3031, Inventories, which replaced section 3030, Inventories.
Section 3031 provides more extensive guidance on measurement, and expands disclosure requirements to increase
transparency. The Corporation’s accounting policy for Aircraft fuel inventory is consistent with measurement requirements
in the new standard and as a result, no adjustment was recorded on transition; however, additional disclosures are required
and have been adopted by the Corporation as described below. Aircraft fuel inventory as at December 31, 2008 amounts
to $97 (2007 - $98).
The main features of the new standard, which impact the Corporation, include:
• Measurementofinventoriesatthelowerofcostandnetrealizablevalue,withguidanceonthedeterminationof
costs.
• Consistentuseofeitherarst-inrst-outorweightedaverageformulatomeasurethecostofotherinventories.The
Corporation uses a weighted average formula to measure cost.
• Reversal of previous write-downs to net realizable value when there is a subsequent increase in the value of
inventories. No write downs or reversals were applicable during the periods presented.
• Disclosureoftheaccountingpolicesused,carryingamounts,amountsrecognizedasanexpense,write-downs,and
the amount of any reversal of any write-downs recognized as a reduction in expenses.
S) PROPERTY AND EQUIPMENT
Property and equipment is initially recorded at cost. Property under capital leases and the related obligation for future lease
payments are initially recorded at an amount equal to the lesser of fair value of the property or equipment and the present
value of those lease payments.
Property and equipment are depreciated to estimated residual values based on the straight-line method over their
estimated service lives. Property and equipment under capital leases and within variable interest entities are depreciated to
estimated residual values over the life of the lease. Aircraft and flight equipment, including spare engines and related parts
(“rotables”) are depreciated over 20 to 25 years, with 10% to 20% estimated residual values. Aircraft reconfiguration costs