Ryanair 2010 Annual Report Download - page 82

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Available-for-Sale Securities
The Company holds certain equity securities, which are classified as available-for-sale, and are
measured at fair value, less incremental direct costs, on initial recognition. Such securities are classified as
available for sale, rather than as an investment in an associate because the Company does not have the power to
exercise significant influence over the investee. Subsequent to initial recognition they are measured at fair value
and changes therein, other than impairment losses, are recognized directly in equity. The fair values of
available-for-sale securities are determined by reference to quoted prices at each reporting date. When an
investment is de-recognized the cumulative gain or loss in equity is transferred to the income statement.
Such securities are considered to be impaired if there is objective evidence which indicates that there
may be a negative influence on future cash flows. This includes where there is a significant or prolonged decline
in the fair value below its cost. All impairment losses are recognized in the income statement and any
cumulative loss in respect of an available-for-sale asset recognized previously in equity is transferred to the
income statement.
Long-lived Assets
As of March 31, 2010, Ryanair had 14.3 billion of long-lived assets, virtually all of which were
aircraft. In accounting for long-lived assets, Ryanair must make estimates about the expected useful lives of the
assets, the expected residual values of the assets, and the potential for impairment based on the fair value of the
assets and the cash flows they generate.
In estimating the lives and expected residual values of its aircraft, Ryanair has primarily relied on its
own and industry experience, recommendations from Boeing, the manufacturer of all of the Company’s aircraft,
and other available marketplace information. Subsequent revisions to these estimates, which can be significant,
could be caused by changes to Ryanair’s maintenance program, changes in utilization of the aircraft,
governmental regulations on aging of aircraft, changes in new aircraft technology, changes in new aircraft fuel
efficiency and changing market prices for new and used aircraft of the same or similar types. Ryanair evaluates
its estimates and assumptions in each reporting period, and, when warranted, adjusts these assumptions.
Generally, these adjustments are accounted for on a prospective basis, through depreciation expense.
Ryanair periodically evaluates its long-lived assets for impairment. Factors that would indicate
potential impairment would include, but are not limited to, significant decreases in the market value of an
aircraft, a significant change in an aircraft’s physical condition and operating or cash flow losses associated with
the use of the aircraft. While the airline industry as a whole has experienced many of these factors from time to
time, Ryanair has not yet been seriously impacted and continues to record positive cash flows from these long-
lived assets. Consequently, Ryanair has not yet identified any impairments related to its existing aircraft fleet.
The Company will continue to monitor its long-lived assets and the general airline operating environment.
The Company’s estimate of the recoverable amount of aircraft residual values is 15% of market value,
determined periodically, based on independent valuations and actual aircraft disposals during the current and
prior periods.
During the fiscal year ended March 31, 2009, accelerated depreciation of 151.6 million arose in
relation to aircraft disposals during the year and an agreement to dispose of additional aircraft in the 2010 fiscal
year. In particular, this charge arose due to an adverse change in the exchange rate between the U.S. dollar and
the euro between the accounting periods in which the aircraft were purchased and March 31, 2009. There was
no such accelerated depreciation recognized in the 2010 fiscal year.