US Airways 2005 Annual Report Download - page 113

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
Debt securities are classified as "held to maturity" in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
("SFAS 115"). Held to maturity investments are carried at amortized cost, which approximates fair value.
The Company classifies securities other than debt underlying its cash equivalents and short-term investments as "available-for-sale" in accordance with
SFAS 115. Cash equivalents are stated at cost, which approximates fair value due to the highly liquid nature and short maturities of the underlying securities.
(d) Restricted cash
Restricted cash includes deposits in trust accounts primarily to fund certain taxes and fees and collateralize letters of credit and workers' compensation
claims, cash deposits securing certain letters of credit and surety bonds and cash deposits held by institutions that process credit card sales transactions.
Restricted cash is stated at cost, which approximates fair value.
(e) Materials and supplies, net
Inventories of materials and supplies are valued at the lower of cost or fair value. Costs are determined using average costing methods. An allowance for
obsolescence is provided for flight equipment expendable and repairable parts.
(f) Property and equipment
Property and equipment are recorded at cost. Interest expenses related to the acquisition of certain property and equipment are capitalized as an additional
cost of the asset or as a leasehold improvement if the asset is leased. Interest capitalized for the years ended December 31, 2005, 2004 and 2003 was
$4 million, $2 million and $2 million, respectively. Property and equipment is depreciated and amortized to residual values over the estimated useful lives or
the lease term, whichever is less, using the straight-line method. Costs of major improvements that enhance the usefulness of the asset are capitalized and
depreciated over the estimated useful life of the asset or the modifications, whichever is less.
The estimated useful lives for ground property and equipment range from 3 to 12 years for owned property and equipment and from 18 to 30 years for
training equipment and buildings. The estimated useful lives of owned aircraft, jet engines, flight equipment and rotable parts range from 5 to 25 years.
Leasehold improvements relating to flight equipment and other property on operating leases are amortized over the life of the lease or the life of the asset,
whichever is shorter, on a straight-line basis.
The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired
as defined by SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.
(g) Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss
and tax 107