Aer Lingus 2008 Annual Report Download - page 55

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AER LINGUS GROUP PLC - ANNUAL REPORT 2008
• IFRIC16 Hedges of a Net Investment in a Foreign Operation (effective for accounting periods beginning on or after 1 October
2008). IFRIC 16 clarifies the accounting treatment in respect of net investment hedging. This includes the fact that net investment
hedging relates to differences in functional currency not presentation currency, and hedging instruments may be held anywhere
in the Group. The requirements of IAS 21 The Effects of Changes in Foreign Exchange Rates do apply to the hedged item. The
Group will apply IFRIC 16 from the effective date, however it is not expected to have an impact on the Group’s financial statements.
• IFRIC17Distributions of Non-cash Assets to Owners (effective for annual periods beginning on or after 1 July 2009). The
interpretation is still subject to EU endorsement. This interpretation applies to transactions in which an entity distributes assets
(other than cash) as dividends to its owners acting in their capacity as owners and how an entity should measure the dividend
payable. The IFRIC also clarifies when an entity should recognise a dividend payable, i.e. when the dividend is appropriately
authorised and no longer at the discretion of the entity. The Group will apply IFRIC 17 from its effective date, subject to EU
endorsement, however it is not expected to have an impact on the Group’s financial statements.
• IFRIC18Transfers of Assets from Customers (effective for transfers of assets from customers received on or after 1 July 2009).
The interpretation is still subject to EU endorsement. This interpretation applies to agreements in which an entity receives from a
customer an item of property, plant and equipment (or an amount of cash which must be used to construct or acquire an item of
property, plant and equipment) that the entity must use either to connect the customer to a network or to provide the customer
with ongoing access to a supply of goods or services, or do both. The Group will apply IFRIC 18 from its effective date, subject
to EU endorsement, however it is not expected to have an impact on the Group’s financial statements.
2. Accounting policies
2.1 Consolidation
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying
a shareholding of more that one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable
or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group and cease to be consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange,
plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in
a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority
interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is
recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference
is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements of all subsidiaries are drawn up to the year ended 31 December.
2.2 Segment reporting
A business segment is a group of assets and operations engaged in providing services that are subject to risks and returns that
are different from those of other business segments. A geographical segment is engaged in providing products or services within
a particular economic environment that are subject to risks and returns that are different from those of segments operating in other
economic environments.
The Group’s primary segments are based on the nature of the services provided (“business segment”) whereas the secondary
segments are based on the journey destination point of the booking (“geographical segment”).
Expenses incurred centrally, including expenses incurred by support and administrative functions, are charged to the business
segments in accordance with their estimated proportionate share of overall activities.
Segment assets and liabilities are those assets and liabilities that are directly attributable to the operating activities of the segment.