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FINANCIAL STATEMENTS Aer Lingus Group Plc
ANNUAL REPORT 2012
72
¹The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period. 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.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount.
²The 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.
2.6 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.
In 2011, as part of the surrender of the lease over its former head office building, the Group acquired a ten year license for the use of certain
property owned by the Dublin Airport Authority. This license is amortised over the ten year license term.
2.7 Impairment of non-financial assets
Assets that are subject to amortisation or depreciation 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 cost to sell and value in use. For the purpose of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Non-financial assets that have been
impaired are reviewed for possible reversal of the impairment at each reporting date. Refer to Note 14 for further detail.
2.8 Financial assets
2.8.1 Classification
The Group classifies its financial assets in the following categories: loans and receivables and financial assets at fair value through profit or loss.
The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial
assets at initial recognition.
(a) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They
are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-
current assets.
(b) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as
hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as
non-current.
2.8.2 Recognition and measurement
Purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset.
Investments are initially recognised at fair value plus transactions costs for all financial assets not carried at fair value through profit or loss.
Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transactions costs are expensed in the income
statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred
Notes to the consolidated financial statements (continued)