Qantas 2016 Annual Report Download - page 99

Notes to the Financial Statements continued
For the year ended 30 June 2016
29 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
iii. Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line
method over their estimated useful lives and is recognised in the Consolidated Income Statement. Goodwill, brand names and
trademarks and airport landing slots are indefinite lived intangible assets and are allocated to the relevant CGU. These indefinite
lived intangible assets are not amortised but tested annually for impairment. Contract intangible assets is not amortised until such
time the intangible asset is ready for use, but tested annually for impairment.
Software 3 – 15 years
Customer contracts/relationships 5 – 10 years
(L) 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. The annual leave provision is
discounted using corporate bond rates which most closely match the terms to maturity of the provision.
The unwinding of the discount is treated as a finance charge.
Employee share plans The grant date fair value of equity-settled share-based payment awards granted to employees is
generally recognised as an expense, with a corresponding increase in equity, over the vesting period of
the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which
related service and non-market performance conditions are expected to be met, such that the amount
ultimately recognised is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date. For share-based payment awards with non-vesting
conditions (such as market performance conditions), the grant date fair value of the share-based
payment is measured to reflect such conditions and that there is no true-up for differences between
expected and actual outcomes.
The fair value of equity-based entitlements settled in cash is recognised as an employee expense with
a corresponding increase in liability over the period during which employees unconditionally become
entitled to payment. The liability is remeasured at each reporting date and at settlement date based on
the fair value. Any changes in the fair value of the liability are recognised as an employee expense in the
Consolidated Income Statement.
Long service leave The liability for long service leave is recognised as a provision for employee benefits 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. The provision is discounted using corporate bond rates which most closely match
the terms to maturity of the provision. The unwinding of the discount is treated as a finance charge.
Defined contribution
superannuation plans
The Qantas Group contributes to employee defined contribution superannuation plans. Contributions to
these plans are recognised as an expense in the Consolidated Income Statement as incurred.
Defined benefit
superannuation plans
The Qantas Group’s net obligation with respect to defined benefit 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 defined benefit members. Only defined benefit members are
included in the Qantas Group’s net obligation calculations. The calculation estimates the amount of
future benefit 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 calculation of defined benefit obligations is performed annually by a qualified actuary using the
projected unit credit method. When the calculation results in a potential asset for the Group, the
recognised asset is limited to the present value of economic benefits available in the form of any future
refunds from the plan or reductions in future contributions to the plan. To calculate the present value of
economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability or asset, which comprise actuarial gains and losses,
the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest),
are recognised immediately in other comprehensive income. The Group determines the net interest expense
(income) on the net defined benefit liability (asset) for the period by applying the discount rate used to
measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit
liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period
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QANTAS ANNUAL REPORT 2016