Air New Zealand 2014 Annual Report Download - page 16

AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 201414
Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised in prior years.
ASSETS HELD FOR RESALE
Non-current assets are classified as held for resale if their carrying amount will be recovered through a sale transaction rather than through
continuing use. The sale must be highly probable and the asset available for immediate sale in its present condition. Management must be
committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets classified as held for resale are measured at the lower of the asset’s previous carrying amount and its fair value less
costs to sell.
WORK IN PROGRESS
Contract work in progress is stated at cost plus the profit recognised to date, using the percentage of completion method, less any
amounts invoiced to customers. Cost includes all expenses directly related to specific contracts and an allocation of direct production
overhead expenses incurred.
Capital work in progress includes the cost of materials, services, labour and direct production overheads.
INVENTORIES
Inventories are measured at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) cost method.
Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
SHARE CAPITAL
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction, net of taxation, from the proceeds.
Where a member of the Group purchases the Company’s share capital, the consideration paid is deducted from equity under the treasury
stock method, until they are reissued or otherwise disposed of.
TREASURY STOCK
When shares are acquired by the Company, the amount of consideration paid is recognised directly in equity. Acquired shares are
classified as treasury stock and presented as a deduction from issued capital. When treasury stock are subsequently sold or reissued
pursuant to equity compensation plans, the cost of treasury stock is reversed and the realised gain or loss on sale or reissue, net of any
directly attributable incremental transaction costs, is recognised within issued capital.
RESERVES
Cash flow hedge reserve
The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that have not yet occurred.
Foreign currency translation reserve
The foreign currency translation reserve comprises foreign exchange differences arising on consolidation of foreign operations together
with the translation of foreign currency borrowings designated as a hedge of net investments in those foreign operations.
Investment revaluation reserve
The investment revaluation reserve comprises changes in the fair value of the investment in quoted equity instruments.
FINANCIAL GUARANTEE CONTRACTS
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the
Company considers these to be insurance contracts (as defined by NZ IFRS 4 - Insurance contracts) and accounts for them as such.
STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR TO 30 JUNE 2014