Qantas 2009 Annual Report Download - page 98

96 Qantas Annual Report 2009
Notes to the Financial Statements
for the year ended 30 June 2009
1. Statement of Significant Accounting Policies continued
(Y) ASSETS CLASSIFIED AS HELD FOR SALE
Non-current assets that are expected to be recovered primarily through
sale rather than through continued use are classified as held for sale.
Immediately before classification as held for sale, the measurement of the
assets is brought up-to-date in accordance with applicable Accounting
Standards. Then, on initial classification as held for sale, assets are
recognised at the lower of carrying amount and fair value less costs to sell.
Impairment losses on initial classification as held for sale are included in the
Income Statement, even when there is a revaluation. The same applies to
gains and losses on subsequent remeasurement.
(Z) SHARE CAPITAL
Ordinary Shares
Incremental costs directly attributable to issue of ordinary shares are
recognised as a deduction from equity, net of any related income
tax benefit.
Repurchase of Share Capital
When share capital recognised as equity is repurchased, the amount of the
consideration paid, including directly attributable costs, is recognised as a
deduction from equity.
In Qantas’ Financial Report, the transactions of the Qantas sponsored
employee share plan trust are treated as being executed directly by Qantas
(as the trust acts as Qantas’ agent). Accordingly, repurchased shares held
by the trust are recognised as treasury shares and deducted from equity.
(AA) COMPARATIVES
Various comparative balances have been reclassified to align with current
year presentation. These amendments have no material impact on the
Financial Statements.
(T) PROVISIONS
A provision is recognised if as a result of a past event, there is a present
legal or constructive obligation that can be measured reliably, and it is
probable that an outflow of economic benefits will be required to settle
the obligation.
If the effect is material, a provision is determined by discounting the
expected future cash flows required to settle the obligation at a pre-tax
rate that reflects current market assessments of the time value of money
and the risks specific to the liability. The unwinding of the discount is
treated as a finance charge.
Dividends
A provision for dividends payable is recognised in the financial year in
which the dividends are declared, for the entire amount, regardless of the
extent to which the dividend will be paid in cash.
Insurance
Qantas is a licensed self-insurer under the New South Wales Workers
Compensation Act, the Victorian Accident Compensation Act and the
Queensland Workers’ Compensation and Rehabilitation Act. Qantas has
made provision for all notified assessed workers’ compensation liabilities,
together with an estimate of liabilities incurred but not reported, based on
an independent actuarial assessment discounted using Australian
Government bond rates that have maturity dates approximating the terms
of Qantas’ obligations. Workers’ compensation for all remaining
employees is commercially insured.
(U) EARNINGS PER SHARE
Basic earnings per share is determined by dividing the Qantas Group’s net
profit attributable to members of Qantas by the weighted average number
of shares on issue during the current year (refer Note 8).
Diluted earnings per share is calculated after taking into account the
number of ordinary shares to be issued for no consideration in relation to
dilutive potential ordinary shares (refer Note 8).
(V) CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash at bank and on hand, cash at call
and short-term money market securities and term deposits that are readily
convertible to a known amount of cash and are subject to an insignificant
risk of change in value.
(W) NET FINANCE COSTS
Net finance costs comprise interest payable on borrowings calculated using
the effective interest method, unwinding of the discount on provisions,
interest receivable on funds invested, gains and losses on fair value hedges
and foreign exchange gains and losses. Finance income is recognised in the
Income Statement as it accrues, using the effective interest method. Where
interest costs relate to qualifying assets, they are capitalised to the cost of
the assets. Qualifying assets are assets that necessarily take a substantial
period of time to be made ready for intended use. Where funds are
borrowed generally, borrowing costs are capitalised using the average
interest rate applicable to the Qantas Group’s debt facilities.
(X) INTEREST-BEARING LIABILITIES
Interest-bearing liabilities are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest-
bearing liabilities are stated at amortised cost, with any difference between
cost and redemption value being recognised in the Income Statement over
the period of the borrowings on an effective interest basis. Interest-bearing
liabilities that are designated as hedged items are subject to measurement
under the hedge accounting requirements.