Qantas 2013 Annual Report Download - page 110

108
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2013
N IMPAIRMENT
Non-nancial Assets
The carrying amounts of non-nancial assets (other than
inventories and deferred tax assets) are reviewed at each
balance date to determine whether there is any indication of
impairment. If any such indication exists, the assets’ recoverable
amount is estimated. For goodwill and intangible assets with
indenite lives, the recoverable amount is estimated each year.
The recoverable amount of assets is the greater of their fair
value less costs to sell and its value in use. Assets which
primarily generate cash ows as a group, such as aircraft, are
assessed on a cash generating unit (CGU) basis inclusive of
related infrastructure and intangible assets and compared to
net cash ows for the CGU. Estimated net cash ows used in
determining recoverable amounts are discounted to their net
present value using a pre-tax discount rate that reects current
market assessments of the time value of money and the risks
specic to the asset.
An appropriate impairment charge is made if the carrying
amount of an asset or CGU exceeds its recoverable amount.
Impairment losses recognised in respect of CGUs are allocated
rst to reduce the carrying amount of any goodwill allocated
to the CGU and then to reduce the carrying amounts of the
other assets in the CGU on a pro-rata basis. The impairment
is expensed in the year in which it occurs. An impairment loss
is reversed if there has been a change in the estimates used
to determine the recoverable amount. An impairment loss with
respect to goodwill is not reversed.
Financial Assets
The carrying value of nancial assets is assessed at each
reporting date to determine whether there is any objective
evidence that it is impaired. A nancial asset is considered to be
impaired if objective evidence indicates that one or more events
have had a negative effect on the estimated future cash ows
of that asset.
An impairment loss in respect of a nancial asset measured
at amortised cost is calculated as the difference between its
carrying amount and the present value of the estimated future
cash ows discounted at the asset’s original effective interest rate.
O ASSETS CLASSIFIED AS HELD FOR SALE
Non-current assets, or disposal groups comprising assets and
liabilities, that are expected to be recovered primarily through
sale rather than through continued use are classied as held
for sale. Immediately before classication as held for sale,
the measurement of the assets or components of a disposal
group is remeasured in accordance with the Qantas Group’s
accounting policies. Thereafter, the assets, or disposal group,
are measured at the lower of carrying amount and fair value
less costs to sell. Any impairment loss on a disposal group is
rst allocated to goodwill and then to remaining assets and
liabilities on a pro-rata basis except that no loss is allocated
to inventories, nancial assets or deferred tax assets, which
continue to be measured in accordance with the Qantas Group’s
accounting policies. Impairment losses on initial classication as
held for sale and subsequent gains or losses on remeasurement
are recognised in the Consolidated Income Statement.
P PROPERTY, PLANT AND EQUIPMENT
Owned Assets
Items of property, plant and equipment are stated at cost or
deemed cost less accumulated depreciation and impairment
losses. Items of property, plant and equipment are initially
recorded at cost, being the fair value of the consideration provided
plus incidental costs directly attributable to the acquisition.
The cost of acquired assets includes the initial estimate at
the time of installation and during the period of use, when
relevant, the costs of dismantling and removing the items and
restoring the site on which they are located, and changes in the
measurement of existing liabilities recognised for these costs
resulting from changes in the timing or outow of resources
required to settle the obligation or from changes in the discount
rate. Subsequent expenditure is capitalised when it is probable
that future economic benets associated with the expenditure
will ow to the Group.
The unwinding of the discount is treated as a nance charge.
The cost also may include transfers from hedge reserve of any
gain or loss on qualifying cash ow hedges of foreign currency
purchases of property, plant and equipment in accordance
with Note 1(F).
Borrowing costs associated with the acquisition of qualifying
assets, such as aircraft and the acquisition, construction or
production of signicant items of other property, plant and
equipment, are capitalised as part of the cost of the asset
to which they relate.
Depreciation
Depreciation is provided on a straight-line basis on all items of
property, plant and equipment except for freehold land which
is not depreciated. The depreciation rates of owned assets are
calculated so as to allocate the cost or valuation of an asset,
less any estimated residual value, over the asset’s estimated
useful life to the Qantas Group. Assets are depreciated from
the date of acquisition or, with respect to internally constructed
assets, from the time an asset is completed and available for
use. The costs of improvements to assets are depreciated over
the remaining useful life of the asset or the estimated useful
life of the improvement, whichever is the shorter. Assets under
nance lease are depreciated over the term of the relevant
lease or, where it is likely the Qantas Group will obtain ownership
of the asset, the life of the asset.
1. Statement of Signicant Accounting Policies
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