Annual Report 2008-2009 - Emirates.com

Emirates
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2. Summary of significant accounting policies (continued)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified as loans
and receivables, held-to-maturity financial assets or financial assets at fair value through profit or loss. Such investments are initially
recognised in the consolidated balance sheet on the trade date at fair value including transaction costs. Assets in this category are
included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.
The investments are derecognised when rights to receive cash flows have expired or have been transferred along with substantially all the
risks and rewards of ownership.
Quoted investments are subsequently measured at their fair value based on quoted bid prices.
Unquoted investments in this category are stated at fair value or at cost less impairment when fair values cannot be reliably measured.
Unrealised gains and losses arising from change in fair value are recognised in the fair value reserves in equity until the investment is sold
or impaired, at which time the cumulative gain or loss previously recognised in equity is included in the consolidated income statement.
At each balance sheet date an assessment is made whether there is any objective evidence of impairment. In such instances, the
cumulative loss - measured as the difference between the acquisition cost and the current fair value, less impairment loss previously
recognised in the consolidated income statement - is removed from equity and recognised in the consolidated income statement.
Held-to-maturity financial assets
Non-derivative financial assets with fixed or determinable payments and fixed maturity that management has the intent and ability to hold
to maturity are recognised in the consolidated balance sheet on the trade date as held-to-maturity financial assets. Such investments are
initially recognised at fair value including transaction costs and carried at amortised cost using the effective interest method. The
investments are derecognised when rights to receive cash flows have expired or have been transferred along with substantially all the
risks and rewards of ownership.
At each balance sheet date, an assessment is made whether there is any objective evidence of impairment. Where necessary the
carrying amount is written down through the consolidated income statement to the present value of expected future cash flows
discounted at the effective interest rate computed at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Such amounts are initially recognised at fair value including transaction costs and carried at amortised cost using the effective interest
method. The amounts are derecognised when rights to receive cash flows have expired or have been transferred along with substantially
all the risks and rewards of ownership.
At each balance sheet date, an assessment is made whether there is any objective evidence of impairment. Where necessary the
carrying amount is written down through the consolidated income statement to the present value of expected future cash flows
discounted at the effective interest rate computed at initial recognition.
Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
measured at their fair value. Derivatives are designated either as a hedge of the fair value of a recognised asset or liability or of a firm
commitment (fair value hedge) or a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with
a recognised asset or liability or a highly probable forecast transaction (cash flow hedge). Fair values are obtained from quoted market
prices, discounted cash flow models and option pricing models as appropriate. All derivatives are carried as assets when fair value is
positive and as liabilities when fair value is negative.