Air Canada 2011 Annual Report Download - page 56

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2011 Air Canada Annual Report
56
14. ACCOUNTING POLICIES
14.1. Future Accounting Standards
The following is an overview of accounting standard changes that Air Canada will be required to adopt in future years. Except
as otherwise noted below for IFRS 9, IAS 32 and amendments to IFRS 7, the standards are effective for Air Canada’s annual
periods beginning on or after January 1, 2013, with earlier application permitted. Air Canada does not expect to adopt any of
these standards before their effective dates. Air Canada continues to evaluate the impact of these standards on its
consolidated statement of operations and financial position.
IFRS 9 – Financial Instruments
IFRS 9 introduces new requirements for the classification and measurement of financial assets. IFRS 9 requires all recognized
financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement to be subsequently
measured at amortized cost or fair value. Specifically, financial assets that are held within a business model whose objective is
to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest
on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other
financial assets including equity investments are measured at their fair values at the end of subsequent accounting periods.
Requirements for financial liabilities were added in October 2010 and they largely carried forward existing requirements in IAS
39, Financial Instruments – Recognition and Measurement, except that fair value changes due to credit risk for liabilities
designated at fair value through profit and loss would generally be recorded in other comprehensive income.
IFRS 9 is effective for annual periods beginning on or after January 1, 2015.
IFRS 10 – Consolidation
IFRS 10 requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS,
consolidation is required when an entity has the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. IFRS 10 replaces SIC-12 Consolidation – Special Purpose Entities and parts of IAS 27
Consolidated and Separate Financial Statements.
IFRS 11 – Joint Arrangements
IFRS 11 requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures
will be accounted for using the equity method of accounting whereas for a joint operation the venturer will recognize its share
of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to
proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes IAS 31, Interests in Joint
Ventures, and SIC-13, Jointly Controlled Entities – Non-monetary Contributions by Venturers.
IFRS 12 – Disclosure of Interests in Other Entities
IFRS 12 establishes disclosure requirements for interests in other entities, such as joint arrangements, associates, special
purpose vehicles and off balance sheet vehicles. The standard carries forward existing disclosures and also introduces
significant additional disclosure requirements that address the nature of, and risks associated with, an entity’s interests in
other entities.
IFRS 13 – Fair Value Measurement
Under existing IFRS, guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair
value measurements. IFRS 13 is a more comprehensive standard for fair value measurement and disclosure requirements for
use across all IFRS standards. The new standard clarifies that fair value is the price that would be received to sell an asset, or
paid to transfer a liability in an orderly transaction between market participants, at the measurement date. It also establishes
disclosures about fair value measurement.