Air New Zealand 2016 Annual Report Download - page 17

Notes to the Financial Statements (continued)
As at 30 June 2016
15
AIR NEW ZEALAND GROUP
11. Property, Plant and Equipment
Owned assets
Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and accumulated impairment
losses. Cost includes expenditure that is directly attributable to the acquisition of the item and in bringing the asset to the location
and working condition for its intended use. Cost may also include transfers from equity of any gains or losses on qualifying cash flow
hedges of foreign currency purchases of property, plant and equipment.
Where significant parts of an item of property, plant and equipment have different useful lives, they are accounted for separately.
A portion of the cost of an acquired aircraft is attributed to its service potential (reflecting the maintenance condition of its engines)
and is depreciated over the shorter of the period to the next major inspection event, overhaul, or the remaining life of the asset. The
cost of major engine overhauls for aircraft owned by the Group is capitalised and depreciated over the period to the next expected
inspection or overhaul.
Capital work in progress includes the cost of materials, services, labour and direct production overheads.
Finance leased assets
Leases under which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. All other
leases are classified as operating leases. Upon initial recognition, assets held under finance leases are measured at amounts equal to
the lower of their fair value and the present value of the minimum lease payments at inception of the lease. A corresponding liability is
also established. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to
that asset.
Manufacturing credits
Where the Group receives credits and other contributions from manufacturers in connection with the acquisition of certain aircraft
and engines, these are either recorded as a reduction to the cost of the related aircraft and engines, or offset against the associated
operating expense, according to the reason for which they were received.
Depreciation
Depreciation is calculated to write down the cost of assets on a straight line basis to an estimated residual value over their economic
lives as follows:
Airframes 18 years
Engines 6 – 15 years
Engine overhauls period to next overhaul
Aircraft specific plant and equipment (including simulators and spares) 10 – 25 years
Buildings 50 – 100 years
Non-aircraft specific leasehold improvements, plant, equipment, furniture and vehicles 2 – 10 years
AIRFRAMES,
ENGINES AND
SIMULATORS
$M
SPARES
$M
PLANT AND
EQUIPMENT
$M
LAND AND
BUILDINGS
$M
CAPITAL WORK
IN PROGRESS
$M
TOTAL
$M
2016
Carrying value as at 1 July 2015 3,556
99 107 192 107 4,061
Additions
Disposals
Depreciation
Impairment
Transfers
Transfer to assets held for resale
Foreign exchange differences (refer note 24)
758
(29)
(373)
-
121
(20)
(26)
15
(6)
(10)
-
-
(1)
-
7
-
(28)
-
43
-
-
7
(1)
(26)
(1)
40
-
-
158
-
-
-
(204)
-
-
945
(36)
(437)
(1)
-
(21)
(26)
Carrying value as at 30 June 2016
Represented by:
Cost
Accumulated depreciation
Provision for impairment
3,987
5,789
(1,802)
-
97
200
(103)
-
129
404
(275)
-
211
409
(180)
(18)
61
61
-
-
4,485
6,863
(2,360)
(18)
Carrying value as at 30 June 2016 3,987 97 129 211 61 4,485