Directors' Report and Financial Statements 31 March ... - Precision Air
Directors' Report and Financial Statements 31 March ... - Precision Air
Directors' Report and Financial Statements 31 March ... - Precision Air
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PRECISION AIR SERVICES PLC<br />
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)<br />
FOR THE YEAR ENDED <strong>31</strong> MARCH 2012<br />
6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)<br />
Impairment of non-financial assets (Continued)<br />
An assessment is made at each reporting date as to whether there is any indication that<br />
previously recognised impairment losses may no longer exist or may have decreased. If such<br />
indication exists, the recoverable amount is estimated. A previously recognised impairment loss<br />
is reversed only if there has been a change in the estimates used to determine the asset’s<br />
recoverable amount since the last impairment loss was recognised. If that is the case the<br />
carrying amount of the asset is increased to its recoverable amount. That increased amount<br />
cannot exceed the carrying amount that would have been determined, net of depreciation, had<br />
no impairment loss been recognised for the asset in prior years. Such reversal is recognised in<br />
the income statement. After such a reversal the depreciation charge is adjusted in future periods<br />
to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis<br />
over its remaining useful life.<br />
Foreign currency translation<br />
Functional <strong>and</strong> presentation currency<br />
Items included in the financial statements of the Group are measured using the currency of the<br />
primary economic environment in which the Group operates (“the functional currency”). The<br />
financial statements are presented in Tanzanian Shillings (TZS), which is the Group’s functional<br />
<strong>and</strong> presentation currency.<br />
Transactions <strong>and</strong> balances<br />
Foreign currency transactions are initially recorded in the Group’s functional currency, Tanzanian<br />
Shillings, by applying the spot exchange rates ruling at the dates of the transactions. Monetary<br />
foreign currency balances are translated into Tanzanian Shillings at the rate ruling at the reporting<br />
date. All other gains or losses arising on translation are dealt with through the income statement<br />
except where hedge accounting is applied.<br />
Cash flow hedges<br />
Certain loan repayment instalments denominated in US dollars are designated as cash flow<br />
hedges of highly probable future foreign currency revenues. The effective portion of exchange<br />
differences arising from the translation of these loan repayment instalments is recognised directly<br />
as other comprehensive income <strong>and</strong> accumulated in the cash flow hedge reserve in equity<br />
in accordance with IAS 39 requirements <strong>and</strong> subsequently reflected in the income statement<br />
when either the future revenue impacts income or its occurrence is no longer expected to occur.<br />
Any ineffective portion is recognised immediately in the income statement in other operating<br />
expenses.<br />
Borrowing costs<br />
Borrowing costs directly attributable to the acquisition, construction or production of qualifying<br />
assets, this being assets that necessarily take a substantial period of time to get ready for their<br />
intended use, are capitalised to the cost of those assets, until such time as the assets are<br />
substantially ready for their intended use or sale. Investment income earned on the temporary<br />
investment of specific borrowings pending the disbursement of the proceeds towards expenditure<br />
on qualifying assets is deducted from the borrowing costs eligible for capitalization.<br />
Other borrowing costs are recognized in the income statement in the period in which they are<br />
incurred.<br />
DIRECTORS’ REPORT AND FINANCIAL STATEMENTS <strong>31</strong> MARCH 2012<br />
33