Air New Zealand 2015 Annual Report Download - page 15

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Notes to the Financial Statements (continued)
As at 30 June 2015
Air New Zealand Annual Financial Results 2015 13
7. 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.
2015
$M
2014
$M
Engineering expendables
Consumable stores
107
13
154
15
120 169
Held at cost
Held initially at cost
Less provision for inventory obsolescence
88
82
(50)
139
75
(45)
Held at net realisable value 32 30
120 169
8. Other Assets
Amounts owing from joint ventures and associates
Amounts owing from related parties are recognised at cost less any provision for impairment.
Contract 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.
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.
Non-current assets held for resale are measured at the lower of the asset’s previous carrying amount and its fair value less costs
to sell.
Defined pension assets
Air New Zealand’s net obligation in respect of defined benefit pension plans is calculated by an independent actuary, by estimating
the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting
the fair value of the plan’s assets. The discount rate reflects the yield on government bonds that have maturity dates approximating
the terms of Air New Zealand’s obligations
When the calculation results in an asset, the value of the asset is limited to the present value of economic benefits available in the
form of any future refunds from the plan or reductions in future contributions from the plan.
Interest-bearing assets
Interest-bearing assets are measured at amortised cost using the effective interest method, less any impairment.