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AirAsia X Berhad • Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m)
Cash and cash equivalents
For the purpose of the statements of cash flows, cash and cash equivalents comprise cash on hand, bank balances, demand deposits, bank overdrafts and other short-
term, highly liquid investments with original maturities of three months and net of bank overdrafts. Deposits held as pledged securities for term loans granted are not
included as cash and cash equivalents.
(n)
Provision
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will
be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are not recognised for future operating losses.
(o)
Share capital
(i)
Classification
Ordinary shares with discretionary dividends are classified as equity. Other shares are classified as equity and/or liability according to the economic substance
of the particular instrument.
(ii)
Share issue costs
Incremental external costs directly attributable to the issuance of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(iii)
Dividends to shareholders of the Company
Dividends are recognised as a liability in the period in which they are declared. A dividend declared after the end of the reporting period, but before the financial
statements are authorised for issue, is not recognised as a liability at the end of the reporting period.
(p)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between
initial recognised amount and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial
period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended
use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs
eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as a liability is reported within finance cost in the income
statements.
Borrowings are classified as current liabilities unless the Group and Company have an unconditional right to defer settlement of the liability for at least twelve months
after the balance sheet date.
