Airtran 2000 Annual Report Download - page 36

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1. Summary of Significant Accounting Policies
Basis of Presentation
Our consolidated financial statements include the accounts of AirTran Holdings, Inc., and our wholly owned subsidiaries, including our principal subsidiary,
AirTran Airways, Inc. Significant intercompany accounts and transactions have been eliminated in consolidation.
AirTran Holdings, Inc., (AirTran) offers affordable scheduled air transportation and mail service, serving short-haul markets primarily in the eastern United
States.
Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires us to make estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results inevitably will differ from
those estimates, and such differences may be material to the consolidated financial statements.
Cash, Cash Equivalents and Restricted Cash
We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Restricted cash primarily represents
amounts escrowed relating to air traffic liability.
Accounts Receivable
Accounts receivable are due primarily from major credit card processors and travel agents. These receivables are unsecured. We provide an allowance for
doubtful accounts equal to the estimated losses expected to be incurred in the collection of accounts receivable.
Spare Parts, Materials and Supplies
Spare parts, materials and supplies are stated at cost using the first-in, first-out method (FIFO). These items are charged to expense when used. Allowances
for obsolescence are provided over the estimated useful life of the related aircraft and engines for spare parts expected to be on hand at the date aircraft are
retired from service.
Property and Equipment
Property and equipment is stated on the basis of cost. Flight equipment is depreciated to its salvage values using the straight-line method.
The B717 fleet has a salvage value of 10 percent and useful life of 25 years. In conjunction with the 1999 impairment charge, the DC-9 fleet was written down to
its fair market value. Accordingly, the salvage values were revised to 38 percent-52 percent, and the useful lives were revised to one to three years. In conjunction
with the 1998 impairment charge, the B737 fleet was written down to its fair market value, and we believe that the fair market value is indicative of its salvage
value. The useful lives of the B737 aircraft were revised to two years. Aircraft parts are depreciated over the respective fleet life to a salvage value of 5 percent.
Other property and equipment is depreciated over three to ten years.
Notes to Consolidated Financial Statements