Air Canada 2012 Annual Report Download - page 99

2012 Consolidated Financial Statements and Notes
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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.
IFRS 9 is effective for annual periods beginning on or after January 1, 2015. The Corporation 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.
The Corporation will adopt this standard effective January 1, 2013. The standard will be applied retrospectively with
adjustment to the opening consolidated statement of financial position as at January 1, 2012. On adoption of IFRS 10, the
Corporation expects the three Fuel Facility Corporations that are consolidated under SIC-12 to no longer be consolidated. The
anticipated impact on the consolidated statement of financial position as at January 1, 2012 is summarized as follows:
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 the consolidated statement of operations is a decrease to Other revenues of
$6, and a decrease to Depreciation, amortization and impairment of $9 for the year ended December 31, 2012, which would
result in an increase of $3 to Net income for the year ended December 31, 2012.
IFRS 11 – Joint Arrangements
IFRS 11 requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures
will be accounted for using the equity method of accounting whereas for a joint operation the venturer will recognize its share
of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to
proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes IAS 31, Interests in Joint
Ventures, and SIC-13, Jointly Controlled Entities-Non-monetary Contributions by Venturers.