Qantas 2011 Annual Report Download - page 62

THE QANTAS GROUP 60
for the year ended 30 June 2011
Notes to the Financial Statements continued
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 benets as a result of the costs incurred and it is probable
that those future economic benets will eventuate and the costs can
be measured reliably. Amortisation is charged to the Consolidated
Income Statement on a straight-line basis over the estimated useful
life of three to  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 indenite 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
benets expected to be received from those assets, which ranges
from  to  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 wages, salaries, annual leave (including leave loading)
and sick leave vesting to employees are recognised in respect of
employees’ services up to the end of the reporting period. These
liabilities are measured at the amounts expected to be paid when
they are settled and include 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 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 reect 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 liability for long service leave is recognised as a provision for
employee benets and measured at the present value of estimated
future payments to be made in respect of services provided by
employees up to the end of the reporting period. 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 Australian
Government bonds rate at balance date which most closely matches
the terms to maturity of the related liabilities. The unwinding of the
discount is treated as a nance charge.
Dened Contribution Superannuation Plans
The Qantas Group contributes to employee dened contribution
superannuation plans. Contributions to these plans are recognised
as an expense in the Consolidated Income Statement as incurred.
Dened Benet Superannuation Plans
The Qantas Group’s net obligation with respect to dened benet
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 dened benet members.
Only dened benet members are included in the Qantas Group’s
net obligation calculations. The calculation estimates the amount of
future benet that employees have earned in return for their service
in the current and prior periods, which is discounted to determine its
present value and the fair value of any plan assets is deducted.
The discount rate used is the yield at balance date on government
bonds that have maturity dates approximating to the terms of the
Qantas Group’s obligations. The calculation is performed by a
qualied actuary using the projected unit credit method.
When the benets of a plan are improved, the portion of the increased
benets relating to past service by employees is recognised as an
expense in the Consolidated Income Statement on a straight-line
basis over the average period until the benets become vested.
To the extent that the benets vest immediately, the expense is
recognised immediately in the Consolidated Income Statement.
In calculating the Qantas Group’s obligation with respect to a plan,
to the extent that any cumulative unrecognised actuarial gain or loss
exceeds  per cent of the greater of the present value of the dened
benet obligation and the fair value of plan assets, that portion is
recognised in the Consolidated 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 dened
benet obligation for employee services in prior periods, resulting
in the current period from the introduction of, or changes to, post-
employment benets or other long-term employee benets. Past
service costs may either be positive (where benets are introduced
or improved) or negative (where existing benets are reduced).
Various actuarial assumptions underpin the determination of the
Qantas Group’s dened benet obligation and are discussed in
Note .
Employee Termination Benets
Provisions for termination benets are only recognised when there
is a detailed formal plan for the termination and where there is no
realistic possibility of withdrawal.
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 outow of economic benets
will be required to settle the obligation.
If the effect is material, a provision is determined by discounting
the expected future cash ows required to settle the obligation
at a pre-tax rate that reects current market assessments of the
time value of money and the risks specic to the liability. The
unwinding of the discount is treated as a nance charge.
Dividends
A provision for dividends is recognised in the nancial year in which
the dividends are declared, for the entire amount, regardless of the
extent to which the dividend will be paid in cash.
1. Statement of Signicant Accounting Policies continued