Air Canada 2012 Annual Report Download - page 98

2012 Air Canada Annual Report
98
Long-lived assets, other than goodwill, that suffered an impairment are reviewed for possible reversal of the impairment at
each reporting date. Management assesses whether there is any indication that an impairment loss recognized in a prior
period no longer exists or has decreased. In assessing whether there is a possible reversal of an impairment loss, management
considers the indicators that gave rise to the impairment loss. If any such indicators exist that an impairment loss has reversed,
management estimates the recoverable amount of the long-lived asset. An impairment loss recognized in prior periods for an
asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognized. The carrying amount of any individual asset in the
CGU is not increased above the carrying value that would have been determined had the original impairment not occurred. A
reversal of an impairment loss is recognized immediately in the statement of operations.
Z) NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD FOR SALE
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered
principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount
and fair value less costs to sell. There are currently no assets held for sale.
AA) PROVISIONS
Provisions are recognized when there is a present legal or constructive obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the obligation. If the
effect is significant, the expected cash flows are discounted using a rate that reflects, where appropriate, the risks specific to
the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as Interest
expense within Other non-operating expense.
The Corporation records an asset and related provision for the costs associated with the retirement of long-lived tangible
assets when a legal or constructive obligation to retire such assets exists. The provision recorded in Other long-term liabilities
is measured as the best estimate of the expenditure required to settle the present obligation at each reporting period. The
associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and then amortized in
accordance with the accounting policy in Note 2T. In subsequent periods, the asset retirement provision is adjusted for the
passage of time through charges to Interest expense. Any change in the amount of the underlying cash flows, due to changes
in the discount rate or changes in the estimate of the expenditure required to settle the present obligation, adjusts both the
asset retirement provision and the related asset.
BB) AIRCRAFT LEASE PAYMENTS IN EXCESS OF OR LESS THAN RENT EXPENSE
Total aircraft operating lease rentals over the lease term are amortized to operating expense (aircraft rent) on a straight-line
basis. Included in Deposits and other assets and Other long-term liabilities are the differences between the straight line
aircraft rent expense and the payments as stipulated under the lease agreement.
CC) EXCEPTIONAL ITEMS
Exceptional items are those items that in management’s view are required to be separately disclosed by virtue of their size or
incidence to enable a full understanding of the Corporation’s financial performance.
DD) SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of
operations, has been identified as the Chief Executive Officer. Air Canada is managed as one operating segment based on how
financial information is produced internally for the purposes of making operating decisions.
EE) ACCOUNTING STANDARDS AND AMENDMENTS ISSUED BUT NOT YET ADOPTED
The following is an overview of accounting standard changes that the Corporation will be required to adopt in future years.
Except as otherwise noted below for IFRS 9 and IAS 32, the standards are effective for the Corporation’s annual periods
beginning on January 1, 2013, with earlier application permitted. The Corporation does not expect to adopt any of these
standards before their effective dates. Except as otherwise indicated, based upon current facts and circumstances, the
Corporation 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. The Corporation continues to evaluate the impact of
these standards on its consolidated financial statements.