Air New Zealand 2013 Annual Report Download - page 13

Air New Zealand Annual Financial Results  11
Financial Assets
Cash and cash equivalents
Cash and cash equivalents include cash on hand, demand deposits, current accounts in banks net of overdras and other short-term
highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value.
Trade and other receivables
Trade and other receivables are recognised at cost less any provision for impairment. A provision for impairment is established when
collection is considered to be doubtful. When a trade receivable is considered uncollectible, it is wrien-off against the provision.
Interest-bearing assets
Interest-bearing assets are measured at amortised cost using the effective interest method, less any impairment.
Non interest-bearing assets
Non interest-bearing assets are measured at amortised cost, less any impairment.
Investment in quoted equity instruments
Changes in the fair value of investments in quoted equity instruments, including any related foreign exchange component, are recognised
through other comprehensive income where an irrevocable election has been made at inception to do so. This election is made in order to
ensure the appropriate representation of long-term, strategic investments as distinct from those held for trading. Dividends from such
investments are recognised in profit or loss when the right to receive payment has been established. The cumulative gains or losses held
in other comprehensive income are not transferred to profit or loss on derecognition or otherwise, although they may be transferred
within equity.
Amounts owing from subsidiaries, joint ventures and associates
Amounts owing from related parties are recognised at cost less any provision for impairment. A provision for impairment is established
when collection is considered to be doubtful. When an amount owing from a related party is considered uncollectible, it is wrien-off
against the provision.
Financial Liabilities
Interest-bearing liabilities
Borrowings and Bonds
Borrowings and Bonds are initially recognised at fair value, net of transaction costs incurred. They are subsequently stated at amortised
cost using the effective interest rate method, where appropriate. Borrowings and Bonds are classified as current liabilities unless the
Group has an unconditional right to defer selement of the liability for more than 12 months aer the balance sheet date.
Finance leases
Finance lease obligations are initially stated at fair value, net of transaction costs incurred. The obligations are subsequently stated at
amortised cost.
Trade and other payables
Trade and other payables are stated at cost.
Amounts owing to subsidiaries, joint ventures and associates
Amounts owing to related parties are stated at cost.
DERIVATIVE FINANCIAL INSTRUMENTS
Air New Zealand uses derivative financial instruments to manage its exposure to foreign exchange, fuel price, and interest rate risks
arising from operational, financing and investment activities. Equity derivatives are used to provide price protection in the event of a
further purchase of shares in Virgin Australia Holdings Limited. Derivative financial instruments are recognised initially at fair value
and transaction costs are expensed immediately. Subsequent to initial recognition, derivative financial instruments are recognised as
described below:
Statement of Accounting Policies (Continued)
For the year to 30 June 2013