Air Canada 2009 Annual Report Download - page 64

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2009 Air Canada Annual Report
64
17. ACCOUNTING POLICIES
17.1 CHANGES IN ACCOUNTING POLICIES
Stock-based compensation plans
The Corporation changed its accounting policy for awards of stock-based compensation granted to Corporation employees
with a graded vesting schedule. Prior to January 1, 2009, the fair value of stock options with a graded vesting schedule
was recognized as compensation expense and a credit to contributed surplus on a straight-line basis over the applicable
vesting period. Effective January 1, 2009, the fair value of stock options with a graded vesting schedule is determined based
on different expected lives for the options that vest each year, as it would be if the award were viewed as several separate
awards, each with a different vesting date, and it is accounted for on that basis. The new accounting policy provides more
reliable and relevant information about the effects of the transactions.
The impact of the change in accounting policy for awards granted to Corporation employees with a graded vesting schedule
was immaterial to any prior period and therefore no adjustments were made to such prior periods.
Goodwill and intangible assets
Effective January 1, 2009, the Corporation adopted new Canadian Institute of Chartered Accountants (“CICA”) accounting
standard 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 Corporation’s accounting policy for intangible assets is consistent with the
new standard and, as a result, no adjustment was recorded on transition.
Credit risk and the fair value of fi nancial assets and fi nancial liabilities
Effective January 1, 2009, the Corporation adopted the recommendations of the Emerging Issues Committee (“EIC”) of
the CICA relating to Abstract EIC-173 Credit Risk and the Fair Value of Financial Assets and Financial Liabilities. Under
this Abstract, the Corporation’s own credit risk and the credit risk of the counterparty are taken into consideration in
determining the fair value of fi nancial assets and liabilities, including derivative instruments. The adoption of this guidance
had no signifi cant impact on the Corporation’s consolidated fi nancial statements as collateral deposits with fuel derivative
counterparties and master netting arrangements are considered in determining whether a credit risk adjustment is required
on the valuation of the derivatives.
Financials instruments – Disclosures
Effective January 1, 2009, the Corporation has adopted the enhanced disclosure requirements of amended CICA section
3862 Financial Instruments – Disclosures. Under these requirements, a classifi cation of fair value measurements recognized
in Air Canada’s Consolidated Statement of Financial Position is presented using a fair value hierarchy that refl ects the
signifi cance of the inputs used in making the measurements.