Air Canada 2010 Annual Report Download - page 61

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2010 Management’s Discussion and Analysis
61
The most significant IFRS 1 exemptions that are expected to apply to the Corporation upon adoption are summarized in
the following table:
Optional Exemption under
IFRS 1
Summary of Exemption Available Policy Selection
Business Combinations The Corporation may elect not to apply IFRS 3 (as amended
in 2008) retrospectively to past business combinations prior
to the date of transition to IFRS. Such election has the effect
of leaving past business combinations as previously reported.
The Corporation expects to elect not to apply
IFRS 3 (as amended in 2008) retrospectively
to business combinations that occurred before
January 1, 2010, the date of transition to IFRS.
Fair value or revaluation as
deemed cost
The Corporation may elect to use any one of the following
amounts at the date of transition for any item within the
scope of the exemption:
a) fair value at date of transition to IFRS; or
b) a revaluation under previous GAAP that meets specified
criteria; or
c) a deemed cost measurement recognized under previous
GAAP based on fair value at the date of an event such as a
privatization or an initial public offering (an ‘event-driven’
value).
The Corporation expects to elect to measure
owned and finance leased aircraft and engines
at January 1, 2010 at fair value and use that fair
value as deemed cost at that date.
Under existing Canadian GAAP, the Corporation
applied fresh start reporting on September
30, 2004. As a result, all consolidated assets
and liabilities of Air Canada were reported at
fair values, except for future income taxes. As
permitted under IFRS 1, the Corporation expects
to elect to apply those fair values as deemed
cost for IFRS as at the date of the revaluation,
with the exception of owned and finance leased
aircraft and engines, which are being measured
at fair value as at January 1, 2010 as described
above and intangible assets and goodwill, which,
in such case, would be measured at historical
cost without the application of the fresh start
fair values. Refer to “Fresh Start Reporting”
below for additional information.
Employee Benefits The Corporation may elect to recognize in retained earnings
all cumulative actuarial gains and losses at the date of
transition to IFRSs.
The Corporation expects to elect to recognize all
cumulative actuarial gains and losses on pension
and other post-retirement benefit plans as at
January 1, 2010 directly in Deficit.
Borrowing Costs The Corporation may elect to designate any date before
the date of transition to IFRSs to capitalize borrowing costs
relating to all qualifying assets for which the commencement
date for capitalization is on or after that date of transition
to IFRS.
The Corporation expects to apply IAS 23R for
annual periods beginning on or after January
1, 2010, the date of transition to IFRS. Under
existing Canadian GAAP, the Corporation had an
accounting policy of capitalizing interest.