EasyJet 2014 Annual Report Download - page 107

Accounts & other information
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Goodwill and other intangible assets
Goodwill is stated at cost less any accumulated impairment losses. It has an indefinite expected useful life and is tested for
impairment at least annually or where there is any indication of impairment.
Landing rights are stated at cost less any accumulated impairment losses. They are considered to have an indefinite useful life
as they will remain available for use for the foreseeable future provided minimum utilisation requirements are observed, and are
tested for impairment at least annually or where there is any indication of impairment.
Other intangible assets are stated at cost less accumulated amortisation, which is calculated to write off their cost, less
estimated residual value, on a straight-line basis over their expected useful lives. Expected useful lives and residual values are
reviewed annually.
Expected useful life
Computer software years
Contractual rights Over the length of the related contracts
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is calculated to write off the
cost, less estimated residual value, of assets, on a straight-line basis over their expected useful lives. Expected useful lives are
reviewed annually.
Expected useful life
Aircraft years
Aircraft spares ears
Aircraft – prepaid maintenance years
Leasehold improvements 5- years or the length of lease if shorter
Fixtures, fittings and equipment years or length of lease of property where equipment is used if shorter
Computer hardware 5 years
Aircraft held under finance leases are depreciated over the shorter of the lease term and their expected useful lives, as shown above.
Residual values, where applicable, are reviewed annually against prevailing market rates at the balance sheet date for
equivalently aged assets and depreciation rates adjusted accordingly on a prospective basis. The carrying value is reviewed
for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.
An element of the cost of a new aircraft is attributed on acquisition to prepaid maintenance and is depreciated over a period
ranging from three to ten years from the date of manufacture. Subsequent costs incurred which lend enhancement to future
periods, such as long-term scheduled maintenance and major overhaul of aircraft and engines, are capitalised and depreciated
over the length of period benefiting from these enhancements. All other maintenance costs are charged to the income
statement as incurred.
Pre-delivery and option payments made in respect of aircraft are recorded in property, plant and equipment at cost. These
amounts are not depreciated.
Gains and losses on disposals (other than aircraft sale and leaseback transactions) are determined by comparing the net
proceeds with the carrying amount and are recognised in the income statement.
Impairment of non-current assets
An impairment loss is recognised to the extent that the carrying value exceeds the higher of the asset’s fair value less cost to
sell and its value in use. Impairment losses recognised on goodwill are not reversed. Impairment losses recognised on assets
other than goodwill are only reversed where changes in the estimates used result in an increase in recoverable amount.