Air New Zealand 2014 Annual Report Download - page 11

AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2014 9
Subsidiaries, associates and joint venture companies
In the Company’s separate financial statements, investments in subsidiaries, associates and joint venture companies are accounted for at
cost less accumulated impairment losses.
Subsidiaries are entities that are controlled either directly or indirectly, by the Company.
Associates are those entities in which the Group, either directly or indirectly, holds a significant but not a controlling interest. Joint
ventures are entities whose activities are jointly controlled by the Group and the Group has rights to the net assets of the entity.
Investments in associates and joint ventures are accounted for using the equity method and are measured in the Statement of Financial
Position at cost plus post-acquisition changes in the Group’s share of net assets. Goodwill relating to associates and joint ventures is
included in the carrying amount of the investment. Dividends reduce the carrying value of the investment.
The amount recognised in the Statement of Financial Performance reflects the Group’s share of the earnings of associates and joint
ventures. The Group recognises its share of changes in other comprehensive income within the Statement of Comprehensive Income.
Investments in associates and joint ventures are carried at the lower of the equity accounted amount and the recoverable amount.
When the Group’s share of accumulated losses in an associate or joint venture equals or exceeds its carrying value, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the associate or joint venture.
FOREIGN CURRENCY TRANSLATION
Functional currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the “functional currency”).
Transactions and balances
Foreign currency transactions are converted into the relevant functional currency using exchange rates approximating those ruling at
transaction date. Monetary assets and liabilities denominated in foreign currencies at the balance date are translated at the rate ruling
at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction. Foreign exchange gains or losses are recognised in the Statement of Financial
Performance, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
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:
(a) 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;
(b) income and expenses for each Statement of Financial Performance are translated at exchange rates approximating those ruling at
transaction date; and
(c) 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.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR TO 30 JUNE 2014