Qantas 2008 Annual Report Download - page 84

82 Qantas Annual Report 2008
(G) Revenue Recognition continued
Other Income
Income resulting from claims for liquidated damages is recognised as
other income when all performance obligations are met, including when
a contractual entitlement exists, it can be reliably measured (including
the impact of the receipt, if any, on the underlying assets’ carrying
value) and it is probable that the economic benefi ts will accrue to the
Qantas Group.
Revenue from aircraft charter and leases, property income,
Qantas Club membership fees, Frequent Flyer revenue relating to
other carriers, freight terminal and service fees, commission revenue,
age availed surplus revenue and other miscellaneous income is
recognised as other income at the time service is provided.
Finance Income
Interest revenue is recognised as it accrues, taking into account the
effective yield on the fi nancial asset.
Asset Disposals
The gain or loss on the disposal of assets is recognised at the date
the signifi cant risks and rewards of ownership of the asset passes
to the buyer, usually when the purchaser takes delivery of the asset.
The gain or loss on disposal is calculated as the difference between
the carrying amount of the asset at the time of disposal and the net
proceeds on disposal.
Aircraft Financing Fees
Fees relating to linked transactions involving the legal form of a lease are
recognised as revenue only when there are no signifi cant obligations to
perform, or refrain from performing, signifi cant activities, management
determines there are no signifi cant limitations on use of the underlying
asset and the possibility of reimbursement is considered remote. Where
these criteria are not met, fees are brought to account as revenue or
expenditure over the period of the respective lease or on a basis which
is representative of the pattern of benefi ts derived from the leasing
transactions, with the unamoritised balance being held as a deferred
lease benefi t.
Dividend Revenue
Dividends/distributions from controlled entities are recognised
as revenue by Qantas when dividends are declared by the
controlled entities. Dividends/distributions from associates, jointly
controlled entities and other investments are recognised when
dividends are paid.
Dividend/distribution revenue is recognised net of any franking credits
or withholding tax.
(H) Goods and Services Tax
Revenues, expenses and assets are recognised net of GST, except
where the amount of GST incurred is not recoverable from the taxation
authority. In these circumstances, the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense. Receivables
and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation
authority is included as a current asset or liability in the Balance Sheet.
Cash fl ows are included in the Cash Flow Statement on a gross basis.
The GST components of cash fl ows arising from investing and fi nancing
activities which are recoverable from, or payable to, the taxation
authority are classifi ed as operating cash fl ows.
(I) Maintenance and Overhaul Costs
Accounting for the cost of providing major airframe and certain engine
maintenance checks for owned aircraft is described in the accounting
policy for property, plant and equipment (Note 1(P)). With respect to
operating lease agreements, where the Qantas Group is required to
return the aircraft with adherence to certain maintenance conditions,
provision is made during the lease term. This provision is based on the
present value of the expected future cost of meeting the maintenance
return condition having regard to the current fl eet plan and long-term
maintenance schedules. The present value of non-maintenance return
conditions is provided for at the inception of the lease.
All other maintenance costs are expensed as incurred, except engine
overhaul costs covered by third party maintenance agreements,
which are expensed on the basis of hours fl own as there is a transfer
of risk and legal obligation to the third party maintenance provider.
Modifi cations that enhance the operating performance or extend the
useful lives of airframes or engines are capitalised and depreciated over
the remaining estimated useful life of the asset.
(J) Income Tax
Income tax on the Income Statement for the years presented comprises
current and deferred tax. Income tax is recognised in the Income
Statement except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the
year, using tax rates enacted or substantially enacted at balance date
and any adjustment to tax payable with respect to previous years.
Deferred tax is provided using the Balance Sheet liability method,
providing for temporary differences between the carrying amounts
of assets and liabilities for fi nancial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are
not provided for: the initial recognition of assets or liabilities that affect
neither accounting nor taxable profi t and differences relating to
investments in controlled entities to the extent that they will probably
not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement
of the carrying amount of assets and liabilities, using tax rates enacted
or substantially enacted at balance date.
A deferred tax asset is recognised only to the extent that management
considers that it is probable that future taxable profi ts will be available
against which the asset can be utilised. Deferred tax assets are reduced
to the extent that it is no longer probable that the related tax benefi t
will be realised.
Qantas provides for income tax in both Australia and overseas
jurisdictions where a liability exists.
(K) Tax Consolidation
Qantas is the head entity in the tax consolidated group comprising
Qantas and all of its Australian wholly-owned entities and partnerships.1
The implementation date of the tax consolidation system for the tax
consolidated group was 1 July 2003.
The current and deferred tax amounts for the tax consolidated group
are allocated among the entities in the group using a group allocation
method. Deferred tax assets and deferred tax liabilities are measured
by reference to the carrying amounts of the assets and liabilities in
the Balance Sheet of Qantas and their tax values applying under
tax consolidation.
The tax consolidated group also includes the partnership between Qantas and AAL
Aviation Limited and between Q Catering Limited and AAL Aviation Limited.
1
Notes to the Financial Statements
for the year ended 30 June 2008
1. Statement of Significant Accounting Policies continued
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