Air New Zealand 2011 Annual Report Download - page 12

Group companies
The results and financial position of all group entities that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(i) assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that
Statement of Financial Position;
(ii) income and expenses for each Statement of Financial Performance are translated at exchange rates approximating those ruling
at transaction date; and
(iii) all resulting exchange differences are recognised as a separate component of equity and in Other Comprehensive Income.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other
currency instruments designated as hedges of such investments, are taken to equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate.
REVENUE RECOGNITION
Airline revenue
Passenger and cargo sales revenue is recognised in revenue in advance at the fair value of the consideration received. Amounts are
transferred to revenue in the Statement of Financial Performance when the actual carriage is performed. Unused tickets are recognised
as revenue using estimates regarding the timing of recognition based on the terms and conditions of the ticket and historical trends.
The Group operates various code share and alliance arrangements. Revenue under these arrangements is recognised when the Group
performs the carriage or otherwise fulfils all relevant contractual commitments.
Contract revenue
Where contract related services are performed over a contractually agreed period, and the amount of revenue, related costs and stage
of completion of the contract can be reliably measured, revenue is recognised by reference to the stage of completion of the contract at
balance date. Other contract related revenue is recognised on completion of the contract.
Other revenue
Other revenue is recognised at the time the service is provided.
Loyalty programmes
The fair value of revenues associated with the award of Airpoints Dollars to Airpoints members as part of the initial sales transaction is
deferred, net of estimated expiry (non-redeemed Airpoints Dollars), until the Airpoints member has redeemed their points. The fair value
of consideration received in respect of sales of Airpoints Dollars to third parties is deferred, net of estimated expiry, until such time as
the Airpoints member has redeemed their points.
The estimate of expiry is based upon historical experience and is recognised in net passenger revenue at the time of the initial sales
transaction.
Deferred Airpoints revenue is recorded within revenue in advance in the Statement of Financial Position.
Investment revenue
Dividend revenue is recognised when the right to receive payment is established.
Interest revenue from investments and fixed deposits is recognised as it accrues, using the effective interest method where appropriate.
CASH FLOWS
Cash flows are included in the Statement of Cash Flows net of Goods and Services Tax.
BORROWING COSTS
Borrowing costs directly attributable to the acquisition of qualifying assets, such as aircraft, are added to the cost of those assets until
such time as the assets are substantially ready for their intended use or sale. Qualifying assets are assets which necessarily take a
substantial period of time to get ready for their intended use. All other borrowing costs are recognised in the Statement of Financial
Performance in the period in which they are incurred.
AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2011
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR TO 30 JUNE 2011