Qantas 2011 Annual Report Download - page 59

57 ANNUAL REPORT 2011
for the year ended 30 June 2011
Notes to the Financial Statements continued
1. Statement of Signicant Accounting Policies continued
G REVENUE RECOGNITION
Passenger, Freight and Tours and Travel Revenue
Passenger and freight revenue is measured at the fair value of the
consideration received, net of sales discount, passenger and freight
interline/IATA commission and Goods and Services Tax. Other sales
commissions paid by the Qantas Group are included in expenditure.
Tours and travel revenue is measured at the net amount of commission
retained by the Qantas Group.
Passenger, freight and tours and travel revenue is recognised when
passengers or freight are uplifted or when tours and travel air tickets
and land content are utilised. Unused tickets are recognised as
revenue using estimates based on the terms and conditions of
the ticket.
Passenger recoveries (including fuel surcharge on passenger tickets)
are included in net passenger revenue. Freight fuel surcharge is
included in net freight revenue.
Frequent Flyer Revenue
Redemption Revenue
Revenue received for the issuance of points is deferred as a liability
(revenue received in advance) until the points are redeemed or the
passenger is uplifted, in the case of Qantas Group ight redemptions.
Redemption revenue is measured based on management’s estimate
of the fair value of the expected awards for which the points will be
redeemed. The fair value of the awards is reduced to take into account
the proportion of points that are expected to expire (breakage).
Marketing Revenue
Marketing revenue associated with the issuance of points is recognised
when the service is performed (typically on the issuance of the point).
Marketing revenue is measured as the difference between the cash
received on issuance of a point and the redemption revenue.
Membership Fee Revenue
Membership fee revenue results from the initial joining fee charged
to members. Revenue is recognised on expiry of any refund period.
Contract Work Revenue
Contract work revenue results from the rendering of services
associated with contracts.
Where services performed are in accordance with contractually
agreed terms over a short period and are task specic, revenue
is recognised when the services have been performed or when
the resulting ownership of the goods passes to the customer.
Revenue on long-term contracts to provide goods or services is
recognised in proportion to the stage of completion of the contract
when the stage of contract completion can be reliably measured
or otherwise on completion of the contract.
Other Revenue/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, when it can be reliably
measured and when it is probable that the economic benets
will accrue to the Qantas Group.
Revenue from aircraft charter and leases, passenger service fees,
Qantas Club membership fees, freight terminal fees, retail/advertising
and other property revenue and other miscellaneous income is
recognised as other revenue/income at the time service is provided.
Asset Disposals
Gains or losses on the disposal of assets are recognised at the date
the signi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 is determined by comparing the proceeds on
disposal with the carrying amount of the asset.
Aircraft Financing Fees
Fees relating to linked transactions involving the legal form of a
lease are recognised as revenue only when there are no signicant
obligations to perform or refrain from performing, signicant activities
and Management determines there are no signi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 benets
derived from the leasing transactions, with the unamortised balance
being held in lease and hire purchase liabilities.
Dividend Revenue
Dividends are recognised as revenue when the right to receive
payment is established. Dividends from foreign entities are
recognised net of withholding tax.
H GOODS AND SERVICES TAX GST
Revenues, expenses and assets are recognised net of the amount
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 ows are included in the Consolidated Cash Flow Statement
on a gross basis. The GST components of cash ows arising from
investing and nancing activities which are recoverable from, or
payable to, the taxation authority are classied as operating
cash ows.
I INCOME TAX
Income tax expense comprises current and deferred tax. Income tax
expense is recognised in the Consolidated Income Statement except
to the extent that it relates to items recognised directly in equity or in
other comprehensive income, in which case it is recognised in equity
or in other comprehensive income.
Current tax liability 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 recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for nancial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for temporary differences arising
from the initial recognition of assets or liabilities that affect neither
accounting nor taxable prot, and differences relating to investments
in controlled entities and associates and jointly controlled entities
to the extent that they will probably not reverse in the foreseeable
future. In addition, deferred tax is not recognised for taxable
temporary differences arising on the initial recognition of goodwill.
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 it is probable
that future taxable pro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 benet will be realised.
Qantas provides for income tax in both Australia and overseas
jurisdictions where a liability exists.