US Airways 2010 Annual Report Download - page 77

Table of Contents
(d) Investments in Marketable Securities
Investments in marketable securities classified as noncurrent assets on the Company's balance sheet represent investments expected to
be converted to cash after 12 months. The Company's investments in marketable securities consist of auction rate securities, which are
classified as available for sale and recorded at fair value. See Note 6(b) for more information on the Company's investments in
marketable securities.
(e) Restricted Cash
Restricted cash primarily includes cash collateral to secure workers' compensation claims and credit card processing holdback
requirements for advance ticket sales for which US Airways has not yet provided air transportation. Restricted cash is stated at cost,
which approximates fair value.
(f) Materials and Supplies, Net
Inventories of materials and supplies are valued at the lower of cost or market value. Costs are determined using average costing
methods. An allowance for obsolescence is provided for flight equipment expendable and repairable parts. These items are generally
charged to expense when issued for use. During 2010, the Company recorded a $6 million write down related to certain spare parts
inventory to reflect lower of cost or market value. During 2009, the Company recorded a $3 million write down related to certain Express
spare parts inventory to reflect lower of cost or market value. During 2008, the Company recorded a $5 million write down related to its
Boeing 737 spare parts inventory to reflect lower of cost or market value.
(g) Property and Equipment
Property and equipment are recorded at cost. Interest expense related to the acquisition of certain property and equipment, including
aircraft purchase deposits, is 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, 2010, 2009 and 2008 was $4 million, $10 million and $6 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 of owned aircraft, jet engines, other flight equipment and rotable parts range from five to 30 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 or improvement, whichever is shorter, on a straight-line basis. The estimated useful lives for other owned property and
equipment range from three to 12 years and range from 18 to 30 years for training equipment and buildings.
The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets
might be impaired. 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.
The Company recorded no impairment charges in the years ended December 31, 2010 and 2009. The Company recorded a $13 million
impairment charge in 2008 related to the decline in the fair value of Boeing 737 rotable parts included in flight equipment on its
consolidated balance sheet.
(h) 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 credit carryforwards. A valuation allowance is established, if necessary, for the amount of
any tax benefits that, based on available evidence, are not expected to be realized.
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