Cathay Pacific 2001 Annual Report Download - page 32

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30 Cathay Pacific Airways Limited Annual Report 2001
13. DEFERRED TAXATION
Provision is made for deferred taxation using the liability method for all timing differences.
In addition, where initial cash benefits have been received in respect of certain lease arrangements, provision
is made for the future obligation to make taxation payments on behalf of the lessors.
14. MAINTENANCE AND OVERHAUL COSTS
Replacement spares and labour costs for maintenance and overhaul of aircraft are charged to the profit and
loss account on consumption and as incurred respectively.
15. REVENUE RECOGNITION
Passenger and cargo ticket sales are recognised as revenue when the transportation service is provided. The
value of unflown passenger and cargo sales is recorded as unearned transportation revenue. Income from
catering and other services is recognised when the services are rendered.
16. RETIREMENT BENEFITS
Arrangements for staff retirement benefits vary from country to country and are made in accordance with local
regulations and customs. The significant plans are defined benefit retirement plans and are valued every year
using a prospective actuarial valuation method. The Group profit and loss account is charged each year with
actuarially determined contributions based on such valuation.
17. FREQUENT-FLYER PROGRAMME
The Group operates a frequent-flyer programme called Asia Miles through a wholly-owned subsidiary company.
The incremental cost of providing travel in exchange for redemption of miles earned by members is accrued in
the accounts as an operating cost and a future liability after allowing for miles which are not expected to be
redeemed. As members redeem awards the incremental liability is reduced to reflect the release of the
outstanding obligations.
18. RELATED PARTIES
For the purposes of these accounts parties are considered to be related to the Group if the Group has the
ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial
and operating decisions, or vice versa, or where the Group and the party are subject to common control or
common significant influence. Related parties may be individuals or entities.
PRINCIPAL ACCOUNTING POLICIES