Ryanair 2008 Annual Report Download - page 46

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46
Basis of preparation
These consolidated financial statements are presented in euro rounded to the nearest thousand, being the
functional currency of the parent entity and the majority of the Group companies. They are prepared on the
historical cost basis, except for derivative financial instruments and available for sale securities which are
stated at fair value, and share based payments which are based on fair value determined as at the grant date
of the relevant share options. Any non-current assets classified as held for sale are stated at the lower of cost
or fair value less costs to sell.
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and
expenses. These estimates and associated assumptions are based on historical experience and various other
factors believed to be reasonable under the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results could differ materially from these estimates. These underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is
revised if the revision affects only that period or in the period of the revision and future periods if these are
also affected. Principal sources of estimation uncertainty have been set forth in the critical accounting
policies section below.
Critical accounting policies
The Group believes that its critical accounting policies, which are those that require management's most
difficult, subjective and complex judgments, are those described in this section. These critical accounting
policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of
reported results to changes in conditions and assumptions are factors to be considered in reviewing the
consolidated financial statements.
Available for sale securities
The Group holds certain equity securities, which are classified as available-for-sale, and are measured at
fair value, less incremental direct costs, on initial recognition. Subsequent to initial recognition they are
measured at fair value and changes therein, other than impairment losses, are recognized directly in equity.
The fair values of available-for-sale securities are determined by reference to quoted prices at each reporting
date. When an investment is de-recognized the cumulative gain or loss in equity is transferred to the income
statement.
Such securities are considered to be impaired if there is objective evidence which indicates that there
may be a negative influence on future cash flows. This includes where there is a significant or prolonged
decline in the fair value below its cost. All impairment losses are recognized in the income statement and
any cumulative loss in respect of an available-for-sale asset recognized previously in equity is transferred to
the income statement.