Qantas 2011 Annual Report Download - page 63

61 ANNUAL REPORT 2011
for the year ended 30 June 2011
Notes to the Financial Statements continued
Workers Compensation Insurance
The Qantas Group 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 notied 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 prot attributable to members of the Qantas Group by the weighted
average number of shares on issue during the current year.
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.
V CASH AND CASH EQUIVALENTS
Cash and cash equivalents include 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 insignicant risk of change in value.
W NET FINANCE COSTS
Net nance costs comprise interest payable on borrowings calculated
using the effective interest method, unwinding of the discount on
provisions and receivables, interest receivable on funds invested,
gains and losses on mark-to-market movement in fair value hedges.
Finance income is recognised in the Consolidated Income Statement
as it accrues, using the effective interest method.
Finance cost is recognised in the Consolidated Income Statement
as incurred, except where interest costs relate to qualifying assets
in which case 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 Consolidated 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.
Y 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 benet.
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.
Treasury Shares
Shares held by the Qantas sponsored employee share plan trust
are recognised as treasury shares and deducted from equity.
Z COMPARATIVES
Various comparative balances have been reclassied to align with
current year presentation. These amendments have no material
impact on the Financial Statements.
AA NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
The following standards, amendments to standards and interpretations
have been identied as those which may impact the Qantas Group in
the period of initial application. They are available for early adoption
at  June , but have not been applied in preparing these
Financial Statements.
— AASB  Financial Instruments and consequential amendments
in AASB - Amendments to Australian Accounting Standards
and AASB - Amendments to Australian Accounting Standards
(December ) includes requirements for the classication,
measurement and derecognition of nancial assets and nancial
liabilities. Retrospective application is generally required, although
there are exceptions, particularly if the entity adopts the standard
for the year ended  June  or earlier. The Qantas Group has
not yet determined the effect of the amendments to AASB , which
will become mandatory for the Qantas Group’s  June 
Financial Statements
— AASB  Related Party Disclosures (revised December )
and amendments in AASB - Amendments to Australian
Accounting Standards simplies and claries the denition of
a related party. The amendments, which will become mandatory
for the Qantas Group’s  June  Financial Statements with
retrospective application required, are not expected to have
any impact
— AASB - Amendments to Australian Interpretation –
Prepayments of a Minimum Funding Requirement – AASB 
make amendments to Interpretation  AASB  – The Limit on
a Dened Benet Asset, Minimum Funding Requirements removing
an unintended consequence arising from the treatment of the
prepayments of future contributions in some circumstances when
there is a minimum funding requirement. The amendments, which
will become mandatory for the Qantas Group’s  June 
Financial Statements with retrospective application required, are
not expected to have any impact
— AASB - Amendments to Australian Accounting Standards,
AASB - Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Project and
AASB - Amendments to Australian Accounting Standards
results in minor changes affecting various AASBs. The amendments,
which become mandatory for the Qantas Group’s  June 
Financial Statements, are not expected to have any impact
— AASB  Amended IAS  Employee Benets (revised June )
has eliminated the use of the ‘corridor approach’ and instead
mandated immediate recognition of all re-measurements of
dened benet liability (asset) including gains and losses in other
comprehensive income. The amendments, which are generally
to be applied retrospectively, will become mandatory for the
Qantas Group’s  June  Financial Statements. If the dened
benet balances as at  June  remained at adoption, the
Qantas Group would report a dened benet liability instead of
a dened benet asset as a result of the immediate recognition
of the unrecognised actuarial losses through other comprehensive
income. Refer to Note  for details of dened benet balances as
at  June 
1. Statement of Signicant Accounting Policies continued