Ryanair 2016 Annual Report Download - page 156

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place, the cumulative unrealised gain or loss recognised in other comprehensive income is recognised in the income
statement immediately.
Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability or an
unrecognised firm commitment, any gain or loss on the hedging instrument is recognised in the income statement. The
hedged item is also stated at fair value in respect of the risk being hedged, with any gain or loss also being recognised in
the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on invoiced price on an average
basis for all stock categories. Net realisable value is calculated as the estimated selling price arising in the ordinary course
of business, net of estimated selling costs.
Trade and other receivables and payables
Trade and other receivables and payables are stated on initial recognition at fair value plus any incremental direct
costs and subsequently at amortised cost, net (in the case of receivables) of any impairment losses, which approximates
fair value given the short-dated nature of these assets and liabilities.
Cash and cash equivalents
Cash represents cash held at banks and available on demand, and is categorised for measurement purposes as
“loans and receivables.”
Cash equivalents are current asset investments (other than cash) that are readily convertible into known amounts
of cash, typically cash deposits of more than one day but less than three months at the date of purchase. Deposits with
maturities greater than three months are recognised as short-term investments, are categorised as loans and receivables and
are carried initially at fair value and then subsequently at amortised cost, using the effective-interest method.
Interest-bearing loans and borrowings
All loans and borrowings are initially recorded at fair value, being the fair value of the consideration received,
net of attributable transaction costs. Subsequent to initial recognition, non-current interest-bearing loans are measured at
amortised cost, using the effective interest yield methodology.
Leases
Leases under which the Company assumes substantially all of the risks and rewards of ownership are classified
as finance leases. Assets held under finance leases are capitalised in the balance sheet, at an amount equal to the lower of
their fair value and the present value of the minimum lease payments, and are depreciated over their estimated useful lives.
The present values of the future lease payments are recorded as obligations under finance leases and the interest element
of a lease obligation is charged to the income statement over the period of the lease in proportion to the balances
outstanding.
Other leases are operating leases and the associated leased assets are not recognised on the Company’s balance
sheet. Expenditure arising under operating leases is charged to the income statement as incurred. The Company also enters
into sale-and-leaseback transactions whereby it sells the rights to an aircraft to an external party and subsequently leases
the aircraft back, by way of an operating lease. Any profit or loss on the disposal where the price achieved is not considered
to be at fair value is spread over the period during which the asset is expected to be used. The profit or loss amount deferred
is included within “other creditors” and split into components of greater than and less than one year.