Alaska Airlines and Horizon Air 2012 Annual Report Download - page 145

one year may be classified as short-term based
on their highly liquid nature and because such
marketable securities represent the investment
of cash that is available for current operations.
All cash equivalents and short-term investments
are classified as available-for-sale and realized
gains and losses are recorded using the specific
identification method. Changes in market value,
excluding other-than-temporary impairments, are
reflected in accumulated other comprehensive
loss (AOCL).
Investments are considered to be impaired when
a decline in fair value is judged to be other-than-
temporary. The Company uses a systematic
methodology that considers available
quantitative and qualitative evidence in
evaluating potential impairment. If the cost of an
investment exceeds its fair value, management
evaluates, among other factors, general market
conditions, credit quality of debt instrument
issuers, the duration and extent to which the fair
value is less than cost, our intent and ability to
hold, or plans to sell, the investment. Once a
decline in fair value is determined to be other-
than-temporary, an impairment charge is
recorded to Other-net in the consolidated
statements of operations and a new cost basis
in the investment is established.
Receivables
Receivables are due on demand and consist
primarily of airline traffic (including credit card)
receivables, Mileage Plan partners, amounts due
from other airlines related to interline
agreements, government tax authorities, and
other miscellaneous amounts due to the
Company, and are net of an allowance for
doubtful accounts. Management determines the
allowance for doubtful accounts based on known
troubled accounts and historical experience
applied to an aging of accounts.
Inventories and Supplies—net
Expendable aircraft parts, materials and supplies
are stated at average cost and are included in
inventories and supplies—net. An obsolescence
allowance for expendable parts is accrued based
on estimated lives of the corresponding fleet
type and salvage values. Surplus inventories are
carried at their net realizable value. The
allowance for all non-surplus expendable
inventories was $26 million and $23 million at
December 31, 2012 and 2011, respectively.
Inventory and supplies—net also includes fuel
inventory of $23 million and $20 million at
December 31, 2012 and 2011, respectively.
Repairable and rotable aircraft parts inventories
are included in flight equipment.
Property, Equipment and Depreciation
Property and equipment are recorded at cost and depreciated using the straight-line method over their
estimated useful lives, which are as follows:
Aircraft and related flight equipment:
Boeing 737 aircraft ......................................... 20years
Bombardier Q400 .......................................... 15years
Buildings ................................................. 25-30 years
Minor building and land improvements ............................. 10years
Capitalized leases and leasehold improvements ...................... Shorter of lease term or
estimated useful life
Computer hardware and software ................................. 3-5years
Other furniture and equipment .................................... 5-10 years
“Related flight equipment” includes rotable and
repairable spare inventories, which are
depreciated over the associated fleet life unless
otherwise noted.
Interest is capitalized on flight equipment
purchase deposits as a cost of the related
asset, and is depreciated over the estimated
useful life of the asset. The capitalized interest
is based on the Company’s weighted-average
borrowing rate.
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ŠForm 10-K