Qantas 2009 Annual Report Download - page 97

95 Qantas Annual Report 2009
Notes to the Financial Statements
for the year ended 30 June 2009
1. Statement of Significant Accounting Policies continued
(Q) INTANGIBLE ASSETS continued
Airport Landing Slots
Airport landing slots are stated at cost less any accumulated impairment
losses. Airport landing slots are allocated to the relevant CGU and are not
amortised as they are considered to have an indefinite useful life and are
tested annually for impairment.
Software
Software is stated at cost less accumulated amortisation and impairment
losses. Software development expenditure, including the cost of materials,
direct labour and other direct costs, is only recognised as an asset when
the Qantas Group controls future economic benefits as a result of the costs
incurred, it is probable that those future economic benefits will eventuate
and the costs can be measured reliably. Amortisation is charged to the
Income Statement on a straight-line basis over the estimated useful life of
three to 10 years.
Brand names and trademarks
Brand names and trademarks are carried at cost less any accumulated
impairment losses. Brand names and trademarks are allocated to the
relevant CGU and are not amortised as they are considered to have an
indefinite useful life and are tested annually for impairment.
Customer contracts/relationships
Customer contracts /relationships are carried at their fair value at the
date of acquisition less accumulated amortisation and impairment
losses. Amortisation is calculated based on the estimated timing of
benefits expected to be received from those assets, which ranges
from 10 to 15 years.
(R) PAYABLES
Liabilities for trade creditors and other amounts payable are carried at cost.
(S) EMPLOYEE BENEFITS
Wages, Salaries, Annual Leave and Sick Leave
Liabilities for employee benefits for wages, salaries, annual leave (including
leave loading) and sick leave vesting to employees expected to be settled
within 12 months of the year end represent present obligations resulting
from employees’ services provided to balance date. The calculation of this
liability is based on remuneration wage and salary rates that the Qantas
Group expects to pay as at balance date including related on-costs, such as
workers’ compensation insurance, superannuation and payroll tax.
Employee Share Plans
The fair value of equity-based entitlements granted to employees after
7 November 2002 is recognised as an employee expense with a
corresponding increase in equity. The fair value is estimated at grant date
and recognised over the period during which the employees become
unconditionally entitled to the equity instrument. The amount recognised
as an expense is adjusted to reflect the actual number of entitlements that
vest, except where forfeiture is only due to share prices not achieving the
threshold for vesting.
Long Service Leave
The provision for employee benefits to long service leave represents the
present value of the estimated future cash outflows to be made resulting
from employees’ services provided to balance date.
The provision is calculated using expected future increases in wage and
salary rates including related on-costs and expected settlement dates
based on staff turnover history and is discounted using the rates attaching
to Australian Government bonds at balance date which most closely match
the terms to maturity of the related liabilities. The unwinding of the
discount is treated as a finance charge.
Defined Contribution Superannuation Plans
The Qantas Group contributes to employee defined contribution
superannuation plans. Contributions to these plans are recognised as an
expense in the Income Statement as incurred.
Defined Benefit Superannuation Plans
Qantas’ net obligation with respect to defined benefit superannuation
plans is calculated separately for each plan. The Qantas Superannuation
Plan has been split based on the divisions which relate to accumulation
members and defined benefit members. Only defined benefit members
are included in Qantas’ net obligation calculations. Obligations of
accumulation members are accrued for as per the above accounting policy.
The calculation estimates the amount of future benefit that employees
have earned in return for their service in the current and prior periods;
that benefit is discounted to determine its present value and the fair
value of any plan assets is deducted.
The discount rate is the yield at balance date on government bonds that
have maturity dates approximating to the terms of Qantas’ obligations.
The calculation is performed by a qualified actuary using the projected
unit credit method.
When the benefits of a plan are improved, the portion of the increased
benefit relating to past service by employees is recognised as an expense
in the Income Statement on a straight-line basis over the average period
until the benefits become vested. To the extent that the benefits
vest immediately, the expense is recognised immediately in the
Income Statement.
All actuarial gains and losses as at 1 July 2004, the date of transition to
IFRS, were recognised. With respect to actuarial gains and losses that arise
subsequent to 1 July 2004, in calculating Qantas’ obligation with respect
to a plan, to the extent that any cumulative unrecognised actuarial gain or
loss exceeds 10 per cent of the greater of the present value of the defined
benefit obligation and the fair value of plan assets, that portion is
recognised in the Income Statement over the expected average remaining
working lives of the active employees participating in the plan. Otherwise,
the actuarial gain or loss is not recognised.
Where the calculation results in plan assets exceeding plan liabilities, the
recognised asset is limited to the net total of any unrecognised actuarial
losses and past service costs and the present value of any future refunds
from the plan or reductions in future contributions to the plan.
Past service cost is the increase in the present value of the defined benefit
obligation for employee services in prior periods, resulting in the current
period from the introduction of, or changes to, post-employment benefits
or other long-term employee benefits. Past service costs may either be
positive (where benefits are introduced or improved) or negative (where
existing benefits are reduced).
Various actuarial assumptions underpin the determination of Qantas’
defined benefit obligation and are discussed in Note 30.
Employee Termination Benefits
Provisions for termination benefits are only recognised when there is a
detailed formal plan for the termination and where there is no realistic
possibility of withdrawal.