Delta Airlines 2012 Annual Report Download - page 63

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Delta Air Lines, Inc., a Delaware corporation, provides scheduled air transportation for passengers and cargo throughout the United States
(“U.S.”) and around the world. Our Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and our wholly-owned
subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). We do not consolidate the
financial statements of any company in which we have an ownership interest of 50% or less. We are not the primary beneficiary of, nor do we have a
controlling financial interest in, any variable interest entity. Accordingly, we have not consolidated any variable interest entity. We reclassified
certain prior period amounts, none of which were material, to conform to the current period presentation.
We have marketing alliances with other airlines to enhance our access to domestic and international markets. These arrangements may include
codesharing, reciprocal frequent flyer program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport
gates and ticket counters, ticket office co-location and other marketing agreements. We have received antitrust immunity for certain marketing
arrangements, which enables us to offer a more integrated route network and develop common sales, marketing and discount programs for customers.
Some of our marketing arrangements provide for the sharing of revenues and expenses. Revenues and expenses associated with collaborative
arrangements are presented on a gross basis in the applicable line items on our Consolidated Statements of Operations.
On July 1, 2010, we sold Compass Airlines, Inc. (“Compass”) and Mesaba Aviation, Inc. (“Mesaba”), our wholly-owned subsidiaries, to Trans
States Airlines, Inc. (“Trans States”) and Pinnacle Airlines Corp. (“Pinnacle”), respectively. Upon the closing of these transactions, we entered into
new or amended long-term capacity purchase agreements with Compass, Mesaba and Pinnacle. Prior to these sales, expenses related to Compass and
Mesaba as our wholly-owned subsidiaries were reported in the applicable expense line items. Subsequent to these sales, expenses related to Compass
and Mesaba are reported as contract carrier arrangements expense.
Use of Estimates
We are required to make estimates and assumptions when preparing our Consolidated Financial Statements in accordance with GAAP. These
estimates and assumptions affect the amounts reported in our Consolidated Financial Statements and the accompanying notes. Actual results could
differ materially from those estimates.
Recent Accounting Standards
Presentation of Comprehensive Income
In June 2011, the Financial Accounting Standards Board ("FASB") issued "Presentation of Comprehensive Income." The standard revises the
presentation and prominence of the items reported in other comprehensive income and is effective retrospectively for fiscal years beginning after
December 15, 2011. We adopted this standard in 2012 and have presented comprehensive income in our Consolidated Statements of Comprehensive
Income (Loss).
Cash and Cash Equivalents and Short-Term Investments
Short-term, highly liquid investments with maturities of three months or less when purchased are classified as cash and cash equivalents.
Investments with maturities of greater than three months, but not in excess of one year, when purchased are classified as short-term investments.
Accounts Receivable
Accounts receivable primarily consist of amounts due from credit card companies from the sale of passenger airline tickets, customers of our
aircraft maintenance and cargo transportation services and other companies for the purchase of mileage credits under our SkyMiles Program. We
provide an allowance for uncollectible accounts equal to the estimated losses expected to be incurred based on historical chargebacks, write-offs,
bankruptcies and other specific analyses. Bad debt expense was not material in any period presented.
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