Aer Lingus 2008 Annual Report Download - page 52

AER LINGUS GROUP PLC - ANNUAL REPORT 2008
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when the asset becomes held for sale. A consequential amendment to IAS 7 states that cash flows arising from purchase, rental
and sale of those assets are classified as cash flows from operating activities. The amendment to IAS 16 will not have an impact
on the Group’s operations because none of the Group’s companies’ ordinary activities comprise renting and subsequently selling
assets.
• AmendmenttoIAS19Employee Benefits (effective for accounting periods beginning on or after 1 January 2009). The
amendment is part of the IASB’s annual improvements project published in May 2008.
– The amendment clarifies that a plan amendment that results in a change in the extent to which benefit promises are affected
by future salary increases is a curtailment, while an amendment that changes benefits attributable to past service gives rise to
a negative past service cost if it results in a reduction in the present value of the defined benefit obligation.
– The definition of return on plan assets has been amended to state that plan administration costs are deducted in the
calculation of return on plan assets only to the extent that such costs have been excluded from measurement of the defined
benefit obligation.
– The distinction between short term and long term employee benefits will be based on whether benefits are due to be settled
within or after 12 months of employee service being rendered.
– IAS 37, Provisions, contingent liabilities and contingent assets, requires contingent liabilities to be disclosed, not recognised.
IAS 19 has been amended to be consistent.
The Group will apply the amendment to IAS 19 from the effective date, however it is not expected to the have any impact on the
Group’s financial statements.
• IAS20Accounting for Government Grants and Disclosure of Government Assistance (effective for accounting periods beginning
on or after 1 January 2009). The benefit of a below market rate government loan is measured as the difference between the
carrying amount in accordance with IAS 39 Financial instruments: Recognition and Measurement and the proceeds received
with the benefit accounted for in accordance with IAS 20. The amendment to IAS 20 will not have an impact on the Group’s
operations as there are no loans received or other grants from the government.
• AmendmenttoIAS23Borrowing Costs (effective for accounting periods beginning on or after 1 January 2009). The amendment
requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of
immediately expensing those borrowing costs will be removed. The Group will apply the amendment to IAS 23 retrospectively
from 1 January 2009, however it is not expected to have any material impact on the Group’s financial statements.
• AmendmenttoIAS23Borrowing Costs (effective for accounting periods beginning on or after 1 January 2009). The amendment
is part of the IASB’s annual improvements project published in May 2008. The definition of borrowing costs has been amended
so that interest expense is calculated using the effective interest method defined in IAS 39 Financial Instruments: Recognition
and measurement. This eliminates the inconsistency of terms between IAS 39 and IAS 23. The Group will apply the amendment
to IAS 23 prospectively to the capitalisation of borrowing costs on qualifying assets from the effective date.
• IAS27Consolidated and Separate Financial Statements (effective for accounting periods beginning on or after 1 July 2009).
The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no
change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the
accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised
in profit or loss. The Group will apply the revised IAS 27 prospectively to transactions with non-controlling interests from
1 January 2010.
• AmendmenttoIAS27Consolidated and Separate Financial Statements (effective for accounting periods beginning on or
after 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. Where an
investment in a subsidiary that is accounted for under IAS 39 Financial Instruments: Recognition and Measurement’, is classified
as held for sale under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IAS 39 would continue to be
applied. The amendment will not have an impact on the Group’s operations because it is the Group’s policy for an investment in
a subsidiary to be recorded at cost in the standalone accounts of each entity.
Basis of Preparation and Statement of
Accounting Policies continued