Air Canada 2010 Annual Report Download - page 134

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2010 Air Canada Annual Report
134
The following information summarizes the financial statement impact of fuel derivatives:
2010 2009
Consolidated Statement of Operations
Operating expenses
Aircraft fuel Realized effective loss on
derivatives designated under
hedge accounting $ (183) $ (419)
Non-operating income (expense)
Gain (loss) on financial instruments
recorded at fair value
Fair market value gain (loss) on
economic hedges
$ (11)
$ 102
Consolidated Other Comprehensive Income (Loss)
Effective loss on derivatives designated
under hedge accounting
Reclassification of net realized loss
on fuel derivatives designated under hedge
accounting to Aircraft fuel expense
Tax on reclassification
n/a
$ 183
$ 1
$ (1)
$ 419
$ 4
2010 2009
Consolidated Statement of Financial Position
Prepaid expenses and other current assets Collateral deposits for fuel derivatives $ - $ 43
Fair market value of fuel derivatives $ 33 $ -
Accounts payable and accrued liabilities Fair market value of fuel derivatives $ - $ (31)
Shareholders’ equity (AOCL) Net loss from fuel derivatives
designated under hedge accounting
(net of tax of 2010 - $nil and 2009 - $1)
$ -
$ (184)
Financial Instrument Fair Values in the Consolidated Statement of Financial Position
The carrying amounts reported in the Consolidated Statement of Financial Position for short term financial assets and
liabilities, which includes Accounts receivable and Accounts payable, approximate fair values due to the immediate or short-
term maturities of these financial instruments. Cash equivalents and Short-term investments are classified as held for
trading and therefore are recorded at fair value.
The carrying amounts of interest rate swaps, share forward contracts, foreign exchange, and fuel derivatives are equal to fair
value, which is based on the amount at which they could be settled based on estimated current market rates.
Management estimated the fair value of its long-term debt based on valuation techniques taking into account market
rates of interest, the condition of any related collateral, the current conditions in credit markets and the current estimated
credit margins applicable to the Corporation based on recent transactions. The estimated fair value of debt is approximately
$4,400 as compared to its carrying value of $4,457.