Westjet 1999 Annual Report Download - page 22

(f) Capital assets:
Capital assets are to be depreciated over their estimated useful lives at the
following rates and methods.
Asset Basis Rate
Aircraft net of estimated
residual value Flight hours Hours flown
Computer hardware
and software Straight-line 5 years
Equipment Straight-line 5 years
Leasehold improvements Straight-line Over the term of the lease
(g) Maintenance costs:
Maintenance costs related to the cost of acquiring the aircraft and
preparation for service are capitalized and included in aircraft costs.
Heavy maintenance ("D" check) costs incurred on aircraft are deferred and
amortized over the remaining useful service life of the aircraft.
All other maintenance costs are expensed as incurred.
(h) Deferred income taxes:
The Corporation follows the deferral method of tax allocation accounting
under which the provision for corporate income taxes is based on the
earnings reported in the accounts and takes into account the tax effects of
timing differences between financial statement income and taxable income.
(i) Financial instruments:
The Corporation manages its foreign exchange exposure through the use of
options, forward contracts and cross currency swaps. Resulting gains and
losses are accrued as exchange rates change to offset gains and losses
resulting from the underlying hedged transactions. Premiums and discounts
are amortized over the term of the contracts.
The Corporation manages its exposure to jet fuel price volatility through
the use of fixed price and fixed ceiling price agreements. Premiums and
discounts are amortized over the term of the contracts.
(j) Comparative figures:
Certain prior period balances have been reclassified to conform with current
presentation.
2. Capital assets:
Accumulated Net book
1999 Cost depreciation value
Aircraft $ 117,084 $ 14,385 $ 102,699
Spare engines and parts 14,331 - 14,331
Computer hardware and software 3,539 1,148 2,391
Computer hardware under capital lease 643 230 413
Equipment 2,484 787 1,697
Leasehold improvements 979 536 443
$ 139,060 $ 17,086 $ 121,974
Aircraft $ 77,766 $ 7,188 $ 70,578
Spare engines and parts 11,521 - 11,521
Computer hardware and software 2,404 709 1,695
Computer hardware under capital lease 476 116 360
Equipment 1,584 493 1,091
Leasehold improvements 592 314 278
$ 94,343 $ 8,820 $ 85,523
During the year capital assets were acquired at an aggregate cost of $168,000 by means of capital leases.
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WestJet Airlines 1999 Annual Report