Aer Lingus 2014 Annual Report Download - page 94

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(iii) Reclassification adjustment – retranslation of investment in joint venture
At 31 December 2013, the retranslation of the Group's interest in the joint venture was not presented within the statement of comprehensive
income. The Group's interest in the joint venture is a foreign operation as per IAS 21, The effects of changes in foreign exchange rates. The
statement of comprehensive income for the year ended 31 December 2013 has been restated to reflect the retranslation of the Group's
interest in joint venture within other comprehensive income as set out below. The restatement has no impact on the income statement,
statement of financial position, statement of cashflows or earnings per share.
For the year ended 31 December 2013
As previously reported
Adjustments
As restated
€'000
€'000
€'000
Other comprehensive income
Total comprehensive income
4,197
38,285
(481)
(481)
3,716
37,804
2.2 Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from
the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition
basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net
assets.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.
Unrealised losses are also eliminated. When necessary, the amounts reported by subsidiaries have been adjusted to conform with the
Group’s accounting policies.
(b) Joint arrangements
The Group applies IFRS 11 to all joint arrangements. Under IFRS 11 investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its
joint arrangement in Propius Holdings Limited and has determined it to be a joint venture. Joint ventures are accounted for using the equity
method.
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the
Group’s share of the post-acquisition profits or losses and the movements in other comprehensive income. When the Group’s share of losses
in a joint venture equals or exceeds its interests in the joint venture (which includes any long-term interests that, in substance, form part of
the Group’s net investment in the joint venture), the Group does not recognise further losses, unless it has incurred obligations or made
payment on behalf of the joint venture.
Unrealised gains on transactions between the Group and its joint venture are eliminated to the extent of the Group’s interest in the joint
venture. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting
policies of the joint venture have been changed where necessary to ensure consistency with the policies adopted by the Group.
Where the joint venture’s reporting currency is other than the Group’s reporting currency, the effect of retranslating the Group's interest in
the closing balance sheet of the joint venture is charged or credited directly to equity, within the “retranslation reserve”.
The Group’s interest in the net assets of its joint venture is reported as ‘Investment in joint venture’ in the Consolidated statement of
financial position and its interest in its result is included in the Consolidated income statement, below operating profit.
See Note 17 for further details on the Group’s investment in its Joint Venture.
2.3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identified as the Chief Executive Officer.
2.4 Foreign currency translation
(a) Functional and presentation currency
The consolidated financial statements are presented in euro, which is the functional and presentation currency of the Company and of all
of its trading subsidiaries.