Air Canada 2011 Annual Report Download - page 92

2011 Air Canada Annual Report
92
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.
Amendments to IAS 19 – Employee Benefits
The amendments to IAS 19 make significant changes to the recognition and measurement of defined benefit pension expense
and termination benefits, and to enhance the disclosures for all employee benefits. Actuarial gains and losses are renamed
‘remeasurements’ and will be recognized immediately in OCI. Remeasurements recognized in OCI will not be recycled through
profit or loss in subsequent periods. The amendments also accelerate the recognition of past service costs whereby they are
recognized in the period of a plan amendment. The annual expense for a funded benefit plan will be computed based on the
application of the discount rate to the net defined benefit asset or liability. The amendments to IAS 19 will also impact the
presentation of pension expense as benefit cost will be split between (i) the cost of benefits accrued in the current period
(service cost) and benefit changes (past-service cost, settlements and curtailments); and (ii) finance expense or income.
A number of other amendments have been made to recognition, measurement and classification including
those re-defining short-term and other long-term benefits guidance on the treatment of taxes related to benefit plans,
guidance on risk/cost sharing factors and expanded disclosures.
The Corporation’s current accounting policy for employee benefits for the presentation of pension expense and the immediate
recognition of actuarial gains and losses in OCI is consistent with the requirements in the new standard, however, additional
disclosures and the computation of annual expense based on the application of the discount rate to the net defined benefit
asset or liability will be required in relation to the revised standard.
Amendments to IAS 1 – Financial Statement Presentation
The amendments to IAS 1 require entities to separate items presented in OCI into two groups, based on whether or not they
may be recycled to profit or loss in the future. Items that will not be recycled such as remeasurements resulting from the
amendments to IAS 19 will be presented separately from items that may be recycled in the future, such as deferred gains and
losses on cash flow hedges. Entities that choose to present OCI items before tax will be required to show the amount of tax
related to the two groups separately.
Amendments to Other Standards
In addition, there have been amendments to existing standards, including IFRS 7 Financial Instruments: Disclosure, IAS 27,
Separate Financial Statements, IAS 28, Investments in Associates and Joint Ventures, and IAS 32, Financial Instruments:
Presentation. IFRS 7 amendments require disclosure about the effects of offsetting financial assets and financial liabilities and
related arrangements on an entity’s financial position. IAS 27 addresses accounting for subsidiaries, jointly controlled entities
and associates in non-consolidated financial statements. IAS 28 has been amended to include joint ventures in its scope and
to address the changes in IFRS 10 – 13. IAS 32 addresses inconsistencies when applying the offsetting requirements, and is
effective for annual periods beginning on or after January 1, 2014.