Aer Lingus 2014 Annual Report Download - page 99

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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.
For defined contribution schemes, the Group pays contributions into the pension schemes in accordance with the trust deed. The Group has
no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when
they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is
available.
For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations
being carried out at each reporting date. Actuarial gains and losses (remeasurements) are recognised in full in the period in which they
occur. They are recognised outside the income statement and are presented in other comprehensive income.
The discount rate applied by the Group in determining the present value of the schemes’ liabilities is determined by reference to market
yields at the reporting date, on high quality corporate bonds of a currency and term consistent with the currency and term of the associated
post employment benefit obligation. Where a deep market for high quality corporate bonds of a term consistent with the post retirement
obligations of a particular scheme does not exist, a rate which is extrapolated, (with assistance from actuarial experts), from available high
quality corporate bonds of shorter maturities is used.
Past service costs/credits are recognised immediately as an expense at the earlier of the following dates (a) when a plan amendment or
curtailment occurs; and (b) upon recognition of related restructuring costs or termination benefits.
The post employment benefit obligation recognised in the statement of financial position represents the present value of the defined benefit
obligation as adjusted for unrecognised past service costs/credits and as reduced by the fair value of scheme assets. Any asset resulting from
this calculation is limited to past service costs/credits, plus the present value of available refunds and reductions in future contributions to
the scheme.
Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee
accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following
dates; (a) when the Group can no longer withdraw the offer of these benefits; and (b) when the Group recognises costs for a restructuring
which is within the scope of IAS 37 and involves the payment of termination benefits.
2.21 Share-based payment
The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as
consideration for equity instruments of the Company (awarded under share awards and share options). The fair value of the employee
services received in exchange for the grant of the share awards is recognised as an expense. The total amount to be expensed is determined
by reference to the fair value of the share awards and options granted:
 Including any market performance conditions; and
 Excluding the impact of any service and non-market performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of share awards and options that are expected to vest. The
total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
At the end of each reporting period, the entity revises its estimates of the number of share awards and options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a
corresponding adjustment to equity.
The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium
where new shares are issued to satisfy awards or options. Where treasury shares (see Note 2.16) are used to satisfy the exercise of vested
share-based compensation awards, the cost of the shares used to satisfy the awards is credited from treasury shares, with an offsetting entry
to share based payment reserves.
The grant by the Company of awards and options over its equity instruments to the employees of subsidiary undertakings is treated as a
capital contribution. The fair value of employee services received, measured at the grant date, is recognised over the vesting period as an
increase to investments in subsidiary undertakings, with a corresponding credit to equity.