Aer Lingus 2013 Annual Report Download - page 94

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Average exchange rates during the year were as follows:
USD
STG
2013
1.33
0.85
2012
1.29
0.82
2.5 Property, plant and equipment
Property, plant and equipment is stated at 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 or losses on qualifying cash flow hedges of foreign currency taken out
to fund the purchase 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 when 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.
Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives as
follows:
Useful lives
Residual values¹
Flight equipment
Aircraft fleet and major spares 2
- short haul aircraft
18 years
10% of cost
- long haul aircraft
20 years
10% of cost
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
1The residual values and useful lives of assets 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 received with the carrying amount written
off.
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 software products controlled by the Group, and which are assessed as likely to generate economic benefits
exceeding costs beyond one year, are recognised as intangible assets. These capitalised costs 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 held at cost and 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.