Lufthansa and Air Canada are both global airline companies. Lufthansa reports under IFRS. Air
Canada reported under pre-changeover Canadian GAAP until 2010 and now reports under IFRS.
Access the financial statements of Lufthansa for its year ended December 31, 2011, and Air Canada for its years ended December 31, 2011, and December 31, 2010, from the respective company's website.
Instructions
(a) What an1ounts are reported on the balance sheet for capital assets for Lufthansa and Air Canada at December 31, 2011? What percentage of total assets is invested in these types of assets by each company?
(b) For Lufthansa: What types of capital assets does the company report? 'What is included in
costs? Is interest capitalized? 'What depreciation methods are used by Lufthansa? How are
residual values estimated for aircraft?
(c) For Air Canada: What types of capital assets does the company report in 201 0? What is
included in costs? Is interest capitalized? 'What depreciation methods are used by Air Canada?
How are residual values estimated for aircraft?
(d) Compare and contrast the above accounting policies for the two companies. Where are there
significant differences between the two policies used by Air Canada in 2010 and 2011? What
will be the impact on the balance sheet and net earnings based on these differences?
(e) For Lufthansa, how are the assets rested for impairment? Were any impairment losses recorded for the year, and if so, how much? 'What did these relate to?· Was there any reversal of impairment losses from previous years?
(f) For Air Canada, how have the assets been tested for impairment and were there any in1pairment losses for 2010 and 2011?
(g) Does Lufthansa have assets held for sale? How much has been reclassified to this account and where is it presented on the balance sheet? 'What does it relate to? Does Air Canada have any assets designated as held for sale?