Aer Lingus 2014 Annual Report Download - page 96

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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.
Landing rights are capitalised at fair value at the date of purchase. Subsequently they are accounted for at cost less any accumulated
impairment losses. Landing rights are considered to have an indefinite life as they will remain available for use without restriction or
limitation on the usage period provided that minimum utilisation requirements are met and therefore they are not amortised. The carrying
value of these rights is subject to impairment testing annually or when events or changes in circumstances indicate that carrying values may
not be recoverable.
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. Indefinite lived assets are tested for impairment at least annually. 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 15 and Note 16 for further details.
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 and liabilities in this category are classified as current if expected to be settled within 12 months of the end
of the reporting period; 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.
Purchases are initially recognised at fair value plus transaction 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 transaction costs are expensed in the
income statement. They are subsequently carried at fair value with changes in fair value taken to “Other gains – net”. Financial assets are
de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has
transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the
effective interest method.
Gains or losses arising from changes in the fair value of the financial assets through the income statement category are presented in the
income statement within “Other gains – net” in the period in which they arise.
2.9 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally
enforceable right to offset the recognised amounts which is not contingent on a future event and there is an intention to settle on a net basis,
or realise the asset and settle the liability simultaneously, which is enforceable, as well as in the normal course of business, in the event of
default or of insolvency or bankruptcy of any of the counterparties. See Note 5.4 for the disclosures in this respect.
2.10 Impairment of financial assets
Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets
is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence
of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
 Significant financial difficulty of the issuer or obligor;
 A breach of contract, such as default or delinquency in interest or principal payments;
 The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that it as
a lender would not otherwise consider;
 It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;