Aer Lingus 2008 Annual Report Download - page 56

AER LINGUS GROUP PLC - ANNUAL REPORT 2008
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2.3 Foreign currency translation
The consolidated financial statements are presented in euro, which is the functional and presentation currency of the Company and all
of its trading subsidiaries.
Foreign currency transactions are translated into euro using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates
of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in
equity as qualifying cash flow hedges.
2.4 Property, plant and equipment
All property, plant and equipment is stated at cost or deemed cost less depreciation. Cost includes expenditure that is directly
attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flow
hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual
values over their estimated useful lives as follows:
Flight equipment Useful lives Residual values
Aircraft fleet and major spares
- Short haul aircraft 18 years 10% residual value
- Long haul aircraft 20 years 10% residual value
Rotable spares 5 – 11 years Nil
Modifications to leased aircraft Period of lease Nil
Property
Freehold Principally 50 years Nil
Leasehold Period of lease Nil
Equipment
Ground equipment 3 – 20 years Nil
Other equipment 2 – 10 years Nil
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying
amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable
amount.
The costs of major airframe and engine maintenance checks on owned and finance leased aircraft are capitalised and depreciated over
the shorter of the period to the next check or the remaining life of the aircraft. On acquisition of new owned or finance leased aircraft,
the expected cost of initial major airframe and engine maintenance checks is separately identified and depreciated over the shorter of
the period to the next check or the remaining life of the aircraft.
2.5 Intangible assets
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific
software. These costs are amortised over their estimated useful lives (three to five years) on a straight line basis. Costs that are directly
associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate
economic benefits exceeding costs beyond one year, are recognised as intangible assets. Computer software development costs
recognised as assets are amortised over their estimated useful lives (not exceeding three years) on a straight line basis.
Other costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred.
2.6 Impairment of non-financial assets
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
Basis of Preparation and Statement of
Accounting Policies continued