Qantas 2005 Annual Report Download - page 74

72
Spirit of Australia
~Notes to the Financial Statements~
for the year ended 30 June 2005
1. Statement of significant accounting policies continued
(p) INTANGIBLE ASSETS
GOODWILL
Goodwill, representing the excess of the purchase consideration plus incidental costs over the fair values of identifiable net assets
acquired, is amortised on a straight-line basis over the period in which future benefits are expected to arise, or 20 years, whichever is the
shorter.
The unamortised balance of goodwill is reviewed at least each balance date. Where the balance exceeds the value of expected future
benefits, the difference is charged to the Statements of Financial Performance.
For associates and joint ventures, the consolidated Financial Statements include the carrying amount of goodwill in the equity accounted
investments’ carrying amounts.
OTHER INTANGIBLES
Airport landing slots represent the purchase consideration of the identifiable intangibles acquired and are amortised on a straight-line
basis over the asset’s estimated useful life, not exceeding 20 years. The unamortised balance of other intangibles is reviewed at least each
balance date. Where the balance exceeds the value of expected future benefits, the difference is charged to the Statements of Financial
Performance.
(q) PAYABLES
Liabilities for trade creditors and other amounts are carried at cost, which is the fair value of the consideration to be paid in the future for
goods and services received, whether or not billed to the Qantas Group.
Deferred cash settlements are recognised at the present value of the outstanding consideration payable on the acquisition of an asset
discounted at prevailing commercial borrowing rates.
(r) FREQUENT FLYER ACCOUNTING
The Qantas Group receives revenue from the sale of Frequent Flyer points to third parties. This revenue is recognised in the Statements
of Financial Performance when it is received. The obligation to provide travel rewards to members of the Qantas Frequent Flyer program
is progressively accrued as points are accumulated, net of estimated points that will not be redeemed. This accrual is based on the
incremental cost (being the cost of meals, fuel and passenger expenses) of providing the travel rewards. The accrual is reduced as
members redeem awards or their entitlements expire.
(s) EMPLOYEE BENEFITS
WAGES AND SALARIES, ANNUAL LEAVE AND SICK LEAVE
Liabilities for employee benefits for wages, salaries, annual leave (including leave loading) and sick leave vesting to employees expected
to be settled within 12 months of the year end represent present obligations resulting from employees’ services provided to balance date.
These are calculated at undiscounted amounts based on remuneration wage and salary rates that the Qantas Group expects to pay as at
balance date including related on-costs, such as workers’ compensation insurance and payroll tax.
LONG SERVICE LEAVE
The provision for employee benefits to long service leave represents the present value of the estimated future cash outflows to be made
resulting from employees’ services provided to balance date.
The provision is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement
dates based on turnover history and is discounted using the rates attaching to national government bonds at balance date which most
closely match the terms of maturity of the related liabilities. The unwinding of the discount is treated as long service leave expense.
EMPLOYEE SHARE PLANS
A liability is recognised for employee share plans, including benefits based on the future value of equity instruments and benefits under
plans allowing the Qantas Group to settle in either cash or shares.
SUPERANNUATION
The Qantas Group contributes to employee superannuation funds. Contributions to these funds are recognised in the Statements of
Financial Performance as they are made. Further details are disclosed in Note 27.