Air New Zealand 2008 Annual Report Download - page 50

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28. EXPLANATION OF TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (NZ IFRS) (CONTINUED)
Impairment in subsidiaries
The application of adjustments on transition to NZ IFRS in certain subsidiaries within the Air New Zealand Group triggered a review for impairment of
the carrying value of intercompany advances and investments in respect of those subsidiaries, resulting in a decrease in the Company’s other assets and
equity on transition to NZ IFRS.
Taxation
NZ IFRS requires deferred taxation to be determined using a balance sheet method as opposed to the income statement method employed under
previous GAAP. Under the balance sheet approach, income tax on the profit or loss for the year comprises both current and deferred taxation. In brief,
temporary differences are differences between the carrying value of assets and liabilities for financial reporting purposes as compared to their carrying
value for tax purposes. Temporary differences may give rise to deferred tax assets or deferred tax liabilities.
The movement in equity in respect of taxation includes the tax on movements in the cash flow hedge reserve for the year and the reversal of tax within
the foreign currency translation reserve under previous GAAP.
Intangible assets
Under previous GAAP, the Group did not recognise any intangible assets. NZ IAS 38: Intangible Assets and related interpretations require computer
software that is not an integral part of the related computer hardware to be treated as an intangible asset, provided certain criteria are met. Such assets
have been reclassified from Property, Plant and Equipment to Intangible Assets.
Statement of Cash Flows
Engine and airframe maintenance which was expensed under previous GAAP, and capitalised under NZ IFRS, has been reclassified from “Payments to
suppliers and employees” to “Acquisition of property, plant and equipment and intangibles”. For the year to 30 June 2007, this amounted to $42 million
in the Group and $31 million in the Company.
The detailed documentation requirements introduced on conversion to NZ IFRS has facilitated further segregation of the line “Rollover of foreign
exchange contracts” between operating, investing and financing activities. Prior year comparatives have been restated accordingly.
AIR NEW ZEALAND
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 30 JUNE 2008
48