Air Canada 2011 Annual Report Download - page 142

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2011 Air Canada Annual Report
142
Consolidated Statement of Operations
– Interest expense increased $19 for the year ended December 31, 2010 related to the debt consolidated from the SPEs
increased at an average effective interest rate of approximately 8% per year.
– The non-controlling interests’ share of net income, as adjusted, is reclassified to Income (loss) attributable to non-
controlling interests in the Consolidated statement of operations.
– Foreign exchange gain under Canadian GAAP for the year ended December 31, 2010 increased by $15 as the additional
long-term debt is denominated in USD.
– Refer to Property and Equipment section below for a discussion of changes to depreciation expense.
ii) Employee benefits
Optional exemption applied
The Corporation has elected to recognize all cumulative actuarial gains and losses on pension and other post-retirement
benefit plans as at January 1, 2010 directly in the Deficit.
Accounting policy differences
Actuarial gains and losses
Under Canadian GAAP, cumulative unrecognized net actuarial gains and losses in excess of 10% of the greater of the
projected benefit obligation or market-related value of plan assets at the beginning of the year were amortized over the
expected remaining service life of active employees.
Under IFRS, the Corporation has elected an accounting policy to recognize net actuarial gains and losses immediately in other
comprehensive income without subsequent reclassification to income.
Fair value of plan assets versus market-related value of plan assets
Under Canadian GAAP, a market-related valuation method was used to value plan assets for the purpose of calculating the
expected return on plan assets. Under the selected method, the differences between investment returns during a given year
and the expected investment returns were amortized on a straight line basis over four years.
Under IFRS, the expected return on plan assets is based on market expectations at the beginning of the period for returns over
the entire life of the related obligation.
The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
IFRIC 14 "IAS 19 – The Limit of a Defined Benefit Asset, Minimum Funding Requirements and their Interaction" (“IFRIC 14”)
addresses the application of paragraph 58 of IAS 19 which limits the measurement of a defined benefit asset to "the present
value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan"
plus past service cost.
IFRIC 14 provides guidance regarding (a) when refunds or reductions in future contributions should be regarded as available in
accordance with paragraph 58 of IAS 19, (b) how a minimum funding requirement might affect the availability of reductions
in future contributions and (c) when a minimum funding requirement might give rise to a liability. The Corporation has
determined that it must record an additional liability associated with the minimum funding requirements in its registered
pension plans. The additional liability is computed by discounting the minimum funding requirements from the actuarial
funding valuations by the discount rate as defined by IAS 19.