Directors' Report and Financial Statements 31 March ... - Precision Air

PRECISION AIR SERVICES PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 31 MARCH 2012
4 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (Continued)
In the process of applying the Group’s accounting policies, management has made estimates and
assumptions that affect the reported amounts of assets and liabilities within current and future
financial years. Estimates and judgments are continually evaluated and are based on historic
experience and other factors, including expectation of future events that are believed to be
reasonable under the circumstances. The critical areas of accounting estimates and judgments
in relation to the preparation of these financial statements are set out below:
Impairment of aircraft
Aircrafts were revalued in 2011 by a professional valuer. Revaluation of aircraft is done every three
years or in a lesser period when evidence indicates that the values have significantly changed.
A decline in the value of aircraft could have a significant effect on the amount recognised in
the financial statements. Management assesses the impairment of aircraft whenever events
or changes in circumstances indicate that the carrying value may not be recoverable. Factors
that are considered important, which could make an impairment review necessary include the
following:
a) Significant decline in the market value beyond that which would be expected from the
passage of time and normal use.
b) Significant changes in technology and regulatory environment.
c) Evidence from internal reporting which indicates that the performance of the asset is, or will
be, worse than expected.
In management’s judgment, the carrying value of aircraft is not impaired as of the date of these
financial statements.
Unused ticket revenue
Unused tickets are recognised as revenue using estimates regarding the timing of recognition
based on terms and conditions of the ticket and historical trends. Other revenue is recognised at
the time the service is provided.
Impairment of trade receivables
The Company assesses recoverability of trade receivables from time to time and where there
is objective evidence (such as the probability of insolvency or significant financial difficulties of
the debtor) that the Company will not be able to collect all of the amounts due under the original
terms of trade. The carrying amount of trade receivable is reduced to reflect recoverable amount.
Property and equipment
Critical estimates are made by the directors in determining the useful lives and residual values of
property and equipment based on the intended use of the asset and the economic lives of those
assets. Subsequent changes in circumstances such as technological advances or prospective
utilization of the assets concerned could result in the actual useful lives or residual values
differing from initial estimates.
DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 31 MARCH 2012
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