Air Canada 2008 Annual Report Download - page 69

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2008 Management’s Discussion and Analysis
69
16. CHANGES IN ACCOUNTING POLICIES
Capital Disclosures and Financial Instruments – Presentation and Disclosure
Effective January 1, 2008, the Corporation adopted three new CICA accounting standards: section 1535, Capital Disclosures,
section 3862, Financial Instruments – Disclosures and section 3863, Financial Instruments – Presentation.
Section 1535 establishes disclosure requirements about an entity’s capital and how it is managed. The purpose is to enable
users of the financial statements to evaluate the entity’s objectives, policies and processes for managing capital.
Sections 3862 and 3863 replace section 3861, Financial Instruments – Disclosure and Presentation, revising and enhancing
its disclosure requirements in certain areas, and carrying forward unchanged its presentation requirements. These new
sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments
and how the entity manages those risks. Refer to section 12 of this MD&A for information on the Corporation’s financial
instruments.
Inventories
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 the measurement
requirements in the new standard and, as a result, no adjustment was recorded on the transition, however, additional
disclosures have been included in Air Canada’s interim unaudited consolidated financial statements commencing in the
first quarter of 2008.
Future Accounting Standard Changes
Goodwill and Intangible Assets
In February 2008, the CICA issued section 3064, Goodwill and Intangible Assets, which provides guidance on the recognition,
measurement, presentation and disclosure for goodwill and intangible assets, other than the initial recognition of goodwill
or intangible assets acquired in a business combination. The standard is effective for fiscal years beginning on or after
October 1, 2008, and requires retroactive application to prior period financial statements. The Corporation has evaluated the
impact of this new standard for adoption on January 1, 2009 and does not expect any significant impact on its consolidated
financial statements.
Business Combinations, Consolidated Financial Statements and Non-controlling Interests
The CICA issued three new accounting standards in January 2009: section 1582, Business Combinations, section 1601,
Consolidated Financial Statements, and section 1602, Non-controlling interests. These new standards will be effective for
fiscal years beginning on or after January 1, 2011. The Corporation is in the process of evaluating the requirements of the
new standards.
Section 1582 replaces section 1581, and establishes standards for the accounting for a business combination. It provides
the Canadian equivalent to International Financial Reporting Standard IFRS 3 – Business Combinations. The section applies
prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after January 1, 2011.
Sections 1601 and 1602 together replace section 1600 – Consolidated Financial Statements. Section 1601, establishes
standards for the preparation of consolidated financial statements. Section 1601 applies to interim and annual consolidated
financial statements relating to fiscal years beginning on or after January 1, 2011. Section 1602 establishes standards for
accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business
combination. It is equivalent to the corresponding provisions of International Financial Reporting Standard IAS 27 -
Consolidated and Separate Financial Statements and applies to interim and annual consolidated financial statements
relating to fiscal years beginning on or after January 1, 2011.
International Financial Reporting Standards
The Canadian Accounting Standards Board has confirmed January 1, 2011 as the changeover date for Canadian publicly
accountable enterprises to start using International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board. IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant
differences in recognition, measurement and disclosures.