US Airways 2005 Annual Report Download - page 223

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
compromise from both those pre-petition liabilities that are not subject to compromise and from post-petition liabilities. Liabilities subject to compromise are
reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. In addition, cash used for reorganization items is disclosed
separately in the statements of cash flows.
(c) Cash equivalents and short-term investments
Cash equivalents and short-term investments consist primarily of cash in money market securities of various banks, commercial paper and asset-backed
securities of various financial institutions and securities backed by the U.S. Government. All highly liquid investments purchased within three months of
maturity are classified as cash equivalents. All other highly liquid investments are classified as short-term investments. Any debt securities are classified as
held to maturity and are carried at amortized cost that approximates fair value. US Airways did not have any short-term investments at December 31, 2004.
US Airways classifies securities other than debt underlying its cash equivalents and short-term investments as "available-for-sale" in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("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. Short-term
investments are stated at fair value with the offsetting unrecognized gain or loss reflected as a separate component of stockholder's equity (deficit) within
accumulated other comprehensive income (loss).
(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, as well as credit card processing collateral. Restricted cash is stated at cost which approximates fair value. See Note 5(b) for further information.
(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 and are charged to
operations as consumed. An allowance for obsolescence is provided for flight equipment expendable and repairable parts over the estimated remaining useful
life of the related fleet.
(f) Property and equipment
Property and equipment are recorded at cost. Interest capitalized on advance payments for aircraft acquisitions, expenditures for aircraft improvements,
and other long-term construction projects are part of these costs. Interest capitalized for the three months ended December 31, 2005, the nine months ended
September 30, 2005, the year ended December 31, 2004, the nine months ended December 31, 2003 and the three months ended March 31, 2003 was
$300,000, $500,000, $5 million, $6 million and $400,000, respectively. Property and equipment is depreciated and amortized to estimated residual values over
the estimated useful lives or the lease term, whichever is less, using the straight-line method.
Effective with the emergence from bankruptcy and the merger with America West Holdings, US Airways conformed its estimated useful lives to those of
America West Holdings. The estimated useful lives range from 3 to 12 years for ground property and equipment and 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 or operating leases are amortized over the life of the lease or the life of the asset, whichever is shorter. For
periods prior to September 30, 2005, the estimated useful lives for ground property and
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