Air Canada 2012 Annual Report Download - page 60

2012 Air Canada Annual Report
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14. ACCOUNTING POLICIES
The following is an overview of accounting standard changes that Air Canada will be required to adopt in future years. Except
as otherwise noted below for IFRS 9 and IAS 32, the standards are effective for Air Canada’s annual periods beginning on
January 1, 2013, with earlier application permitted. Air Canada does not expect to adopt any of these standards before their
effective dates. Except as otherwise indicated, based upon current facts and circumstances, Air Canada does not expect a
material impact on its consolidated statement of operations and financial position upon the adoption of those standards
which are effective on January 1, 2013. Air Canada continues to evaluate the impact of these standards on its consolidated
financial statements.
IFRS 9 – Financial Instruments
IFRS 9 introduces new requirements for the classification and measurement of financial assets. IFRS 9 requires all recognized
financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement to be measured at
amortized cost or fair value in subsequent accounting periods following initial recognition. . Specifically, financial assets that
are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash
flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost
at the end of subsequent accounting periods. All other financial assets including equity investments are measured at their fair
values at the end of subsequent accounting periods.
Requirements for classification and measurement of financial liabilities were added in October 2010 and they largely carried
forward existing requirements in IAS 39, Financial Instruments – Recognition and Measurement, except that fair value changes
due to credit risk for liabilities designated at fair value through profit and loss would generally be recorded in Other
Comprehensive Income (“OCI”).
IFRS 9 is effective for annual periods beginning on or after January 1, 2015. Air Canada continues to evaluate the impact of
this standard on its consolidated financial statements.
IFRS 10 – Consolidation
IFRS 10 requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS,
consolidation is required when an entity has the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. IFRS 10 replaces SIC-12 Consolidation – Special Purpose Entities and parts of IAS 27
Consolidated and Separate Financial Statements.
Air Canada will adopt this standard effective January 1, 2013. The standard will be applied retrospectively with adjustment to
its opening consolidated statement of financial position as at January 1, 2012. On adoption of IFRS 10, Air Canada expects the
three Fuel Facility Corporations that are consolidated under SIC-12 to no longer be consolidated.
The anticipated impact on Air Canada’s consolidated statement of financial position as at January 1, 2012 is summarized as
follows:
(Canadian dollars in millions) Decrease
Cash and cash equivalents $ (71)
Property and equipment (150)
Current portion of long-term debt (5)
Long-term debt (199)
Other long-term liabilities (6)
Deficit (6)
Non-controlling interests (5)
The expected impact of the amended standard on Air Canada’s consolidated statement of operations is a decrease to Other
revenues of $6 million, and a decrease to Depreciation, amortization and impairment of $9 million for the year ended
December 31, 2012, which would result in an increase of $3 million to Net income for the year ended December 31, 2012.