Aer Lingus 2013 Annual Report Download - page 97

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2.15 Cash and cash equivalents and deposits
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within current liabilities on the statement of financial
position.
Deposits with original maturities of less than three months are classified as cash and cash equivalents. Deposits with an original maturity of
more than 3 months are classified as current assets if maturing within 12 months and otherwise as non current assets.
2.16 Share capital
Ordinary shares issued are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds received.
Where any group company purchases the Company’s equity share capital, the consideration paid, including any directly attributable
incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or
reissued. The balance is classified within reserves, as treasury shares. Where such shares are subsequently reissued, any consideration
received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to
the Company’s equity holders.
2.17 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if payment is due within 12 months or less (or in the normal operating cycle of the
business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.18 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost;
any difference between the net proceeds and the redemption value is recognised in the income statement over the period of the borrowings
using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12
months after the end of the reporting period.
2.19 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it
relates to items recognised in other comprehensive income or directly in equity. In this case the tax is recognised in other comprehensive
income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax rates and laws enacted or substantively enacted at the reporting date in the
countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken
in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred income tax is determined using tax rates and laws that have been enacted or substantively
enacted by the reporting date and which are expected to apply when the related deferred income tax asset is realised or the deferred income
tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the Group
controls the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the
taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
The tax effects of income tax losses available for carry forward are recognised as an asset when it is probable that future taxable profits will
be available against which these losses can be utilised.
2.20 Employee benefits
Post employment benefit obligations
The Group companies operate various pension schemes. The schemes are generally funded through payments to trustee-administered funds.
The Group contributes to both defined benefit and defined contribution plans.