Qantas 2010 Annual Report Download - page 59

57 ANNUAL REPORT 2010
for the year ended 30 June 2010
Notes to the Financial Statements continued
(Q) INTANGIBLE ASSETS
Goodwill
All business combinations are accounted for by applying the acquisition
method. Goodwill represents the difference between the cost of the
acquisition and the fair value of the net identi able assets acquired.
Goodwill acquired before transition to IFRS is carried at deemed cost.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill
is allocated to CGUs and is tested annually for impairment. With respect
to associates and jointly controlled entities, the carrying amount of
goodwill is included in the carrying amount of the investment in the
associate or the jointly controlled entity.
Negative goodwill arising on an acquisition is recognised directly in the
Consolidated Income Statement.
Airport Landing Slots
Airport landing slots are stated at cost less any accumulated impairment
losses. Airport landing slots are allocated to the relevant CGU and are
not amortised as they are considered to have an inde nite useful life and
are tested annually for impairment.
Software
Software is stated at cost less accumulated amortisation and impairment
losses. Software development expenditure, including the cost of materials,
direct labour and other direct costs, is only recognised as an asset when
the Qantas Group controls future economic bene ts as a result of the
costs incurred, it is probable that those future economic bene ts will
eventuate and the costs can be measured reliably. Amortisation is charged
to the Consolidated Income Statement on a straight-line basis over the
estimated useful life of three to 10 years.
Brand Names and Trademarks
Brand names and trademarks are carried at cost less any accumulated
impairment losses. Brand names and trademarks are allocated to the
relevant CGU and are not amortised as they are considered to have an
inde nite useful life and are tested annually for impairment.
Customer Contracts/Relationships
Customer contracts/relationships are carried at their fair value at the
date of acquisition less accumulated amortisation and impairment losses.
Amortisation is calculated based on the estimated timing of bene ts
expected to be received from those assets, which ranges from 10 to
15 years.
(R) PAYABLES
Liabilities for trade creditors and other amounts payable are carried
at cost.
(S) EMPLOYEE BENEFITS
Wages, Salaries, Annual Leave and Sick Leave
Liabilities for wages, salaries, annual leave (including leave loading) and
sick leave vesting to employees are recognised in respect of employees’
services up to the end of the reporting period. These liabilities are
measured at the amounts expected to be paid when they are settled
including related on-costs, such as workers compensation insurance,
superannuation and payroll tax.
Employee Share Plans
The fair value of equity-based entitlements granted to employees is
recognised as an employee expense with a corresponding increase in
equity. The fair value is estimated at grant date and recognised over
the period during which the employees become unconditionally entitled
to the equity instrument. The amount recognised as an expense is
adjusted to re ect the actual number of entitlements that vest, except
where forfeiture is only due to share prices not achieving the threshold
for vesting.
Long Service Leave
The liability for long service leave is recognised as a provision for
employee bene ts and measured at the present value of estimated
future payments to be made in respect of services provided by employees
up to the end of the reporting period. The provision is calculated using
expected future increases in wage and salary rates including related
on-costs and expected settlement dates based on staff turnover history
and is discounted using the Australian Government bonds rate at balance
date which most closely matches the terms to maturity of the related
liabilities. The unwinding of the discount is treated as a  nance charge.
De ned Contribution Superannuation Plans
The Qantas Group contributes to employee de ned contribution
superannuation plans. Contributions to these plans are recognised
as an expense in the Consolidated Income Statement as incurred.
De ned Bene t Superannuation Plans
The Qantas Group’s net obligation with respect to de ned bene t
superannuation plans is calculated separately for each plan. The Qantas
Superannuation Plan has been split based on the divisions which relate
to accumulation members and de ned bene t members. Only de ned
bene t members are included in the Qantas Group’s net obligation
calculations. The calculation estimates the amount of future bene t that
employees have earned in return for their service in the current and prior
periods, which is discounted to determine its present value and the fair
value of any plan assets is deducted.
The discount rate used is the yield at balance date on government bonds
that have maturity dates approximating to the terms of the Qantas
Group’s obligations. The calculation is performed by a quali ed actuary
using the projected unit credit method.
When the bene ts of a plan are improved, the portion of the increased
bene ts relating to past service by employees is recognised as an
expense in the Consolidated Income Statement on a straight-line basis
over the average period until the bene ts become vested. To the extent
that the bene ts vest immediately, the expense is recognised immediately
in the Consolidated Income Statement.
In calculating the Qantas Group’s obligation with respect to a plan, to the
extent that any cumulative unrecognised actuarial gain or loss exceeds
10 per cent of the greater of the present value of the de ned bene t
obligation and the fair value of plan assets, that portion is recognised
in the Consolidated Income Statement over the expected average
remaining working lives of the active employees participating in the plan.
Otherwise, the actuarial gain or loss is not recognised.
Where the calculation results in plan assets exceeding plan liabilities, the
recognised asset is limited to the net total of any unrecognised actuarial
losses and past service costs and the present value of any future refunds
from the plan or reductions in future contributions to the plan.
Past service cost is the increase in the present value of the de ned
bene t obligation for employee services in prior periods, resulting in the
current period from the introduction of, or changes to, post-employment
bene ts or other long-term employee bene ts. Past service costs may
either be positive (where bene
ts are introduced or improved) or
negative (where existing bene ts are reduced).
Various actuarial assumptions underpin the determination of the Qantas
Group’s de ned bene t obligation and are discussed in Note 30.
1. Statement of Signi cant Accounting Policies continued