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58 WestJet 2009 Annual Report
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
For the years ended December 31, 2009 and 2008
(Stated in thousands of Canadian dollars, except share and per share data)
2. Change in accounting policies (continued)
(ii) Business combinations
In January 2009, the CICA Accounting Standards Board (AcSB) issued Section 1582, Business Combinations. Section 1582 replaces Section 1581,
Business Combinations, and harmonizes the Canadian standards with International Financial Reporting Standards (IFRS). Section 1582 establishes
principles and requirements of the acquisition method for business combinations and related disclosures. This section is effective January 1,
2011, and applies prospectively to business combinations for which the acquisition date is on or after the fi rst reporting period of the Corporation,
beginning on or after January 1, 2011. Early adoption is permitted. The Corporation elected to adopt Section 1582 prospectively, effective January
1, 2009. Adoption of this section did not impact the Corporation’s results of operations or fi nancial position.
(iii) Consolidated fi nancial statements and non-controlling interests
In January 2009, the AcSB issued Section 1601, Consolidated Financial Statements, and Section 1602, Non-controlling Interests, which together
replace Section 1600, Consolidated Financial Statements, and harmonize the Canadian standards with IFRS. Section 1601 establishes standards
for the preparation of consolidated fi nancial statements. Section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary
in consolidated fi nancial statements subsequent to a business combination. These sections are effective on or after the beginning of the fi rst
reporting period beginning on or after January 1, 2011. Early adoption is permitted. The Corporation elected to adopt Section 1601 and Section 1602
prospectively, effective January 1, 2009. Adoption of these sections did not impact the Corporation’s results of operations or fi nancial position.
(iv) Financial instruments
In May 2009, the CICA amended Section 3862, Financial Instruments – Disclosures, to improve disclosure requirements about fair value
measurement for fi nancial instruments and liquidity risk disclosures. These amendments require a three-level hierarchy that refl ects the
signifi cance of the inputs used in making the fair value measurements. Fair values of assets and liabilities included in level 1 are determined
by reference to quoted prices in active markets for identical assets and liabilities. Assets and liabilities in level 2 include valuations using
inputs other than quoted prices for which all signifi cant outputs are observable, either directly or indirectly. Level 3 valuations are based on
inputs that are unobservable and signifi cant to the overall fair value measurement. See note 13, fi nancial instruments and risk management for
further disclosure.
(v) International fi nancial reporting standards (IFRS)
On February 13, 2008, the AcSB confi rmed that the changeover to IFRS from Canadian GAAP will be required for publicly accountable enterprises
for interim and annual fi nancial statements, effective for fi scal years beginning on or after January 1, 2011, including comparatives for 2010.
The objective is to improve fi nancial reporting by having one single set of accounting standards that are comparable with other entities on an
international basis. The transition from current Canadian GAAP to IFRS is a signifi cant undertaking that may materially affect the Corporation’s
reported fi nancial position and results of operations. The Corporation continues to monitor standards developments as issued by the International
Accounting Standards Board and the AcSB, as well as regulatory developments as issued by the Canadian Securities Administrators which may
affect the timing, nature or disclosure of its adoption of IFRS.
3. Capital management
The Corporation’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confi dence and to sustain the future
development of the airline. The Corporation manages its capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets.
In order to maintain or adjust the capital structure, the Corporation may from time to time purchase shares for cancellation pursuant to normal
course issuer bids, issue new shares and adjust current and projected debt levels.