Air Canada 2009 Annual Report Download - page 69

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2009 Management’s Discussion and Analysis
69
Expected IFRS accounting policy
Componentization
IAS 16 Property, plant and equipment (“IAS 16”) reinforces the requirement under Canadian GAAP that requires that each
part of property, plant and equipment that has a cost that is signifi cant in relation to the overall cost of the item should be
depreciated separately.
The Corporation will adopt this revised accounting policy with respect to componentization of property, plant and equipment
on transition to IFRS.
Capitalization of major engine and airframe overhaul
In addition, IAS 16 provides guidance that would require major engine and airframe overhaul be treated as separate
components of an aircraft with the overhaul cost capitalised and depreciated over the period to the next major overhaul.
The Corporation will adopt this revised accounting policy with respect to capitalization of major maintenance on transition
to IFRS.
Leases
Under IAS 17 Leases, a lease is classifi ed as either a fi nance lease or an operating lease. Lease classifi cation depends on
whether substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred from the
lessor to the lessee, and is made at inception of the lease. A number of indicators are used to assist in lease classifi cation
however, quantitative thresholds are not offered as an indicator as under current Canadian GAAP.
The Corporation has developed internal indicators to assist in lease classifi cation under IFRS.
Intangible assets
Current accounting policy
Intangible assets are initially recorded at cost. Indefi nite life assets are not amortized while assets with fi nite lives are
amortized on a straight-line basis to nil over their estimated useful lives.
Expected IFRS accounting policy
No signifi cant changes have been identifi ed from the Corporation’s current accounting policy.
IFRS transition
With regards to IFRS transition, the Corporation has thoroughly analyzed the optional exemptions available under IFRS 1
First-time Adoption of International Financial Reporting Standards (“IFRS 1”). The decisions about the optional exemptions
available under IFRS 1 are preliminary at this time. The decisions about accounting policy choices available under IFRS 1
and other individual IFRS standards will be disclosed throughout 2010 as they are reviewed by the Audit, Finance and
Risk Committee and fi nalized. The Audit, Finance and Risk Committee Audit, Finance and Risk Committee will consider the
appropriateness of the accounting policies applied under IFRS both at the time of transition and following transition.