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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)
(s)
Revenue recognition (continued)
Fuel surcharge, insurance surcharge, administrative fees, seat fees, change fees, convenience fees, excess baggage and baggage handling fees are recognised upon
the completion of services rendered net of discounts. Freight and other related revenue are recognised upon the completion of services rendered net of discounts.
Management fees, incentives and commission income are recognised on an accrual basis.
Revenue from aircraft operating lease is recorded on a straight line basis over the term of the lease.
Interest income is recognised using the effective interest method.
The Group participates in a loyalty programme where customers accumulate points for purchases made which entitle them to discounts on future purchases. Award
points are recognised as a cost of sale at the time of issue while revenue from the award points is recognised when the points are redeemed. The amount of revenue
is based on the number of points redeemed and the redemption value of each point. Award points expire 36 months after the initial sale.
(t)
Foreign currencies
(i)
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the
entity operates (“the functional currency”). The financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation
currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where
items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in other comprehensive income
as qualifying cash flow hedges and qualifying net investment hedges.
Foreign exchange gains and losses arising from operations are included in arriving at the operating profit. Foreign exchange gains and losses arising from
borrowings (after effects of effective hedges) and amounts due from associates are separately disclosed after net operating profit.
(iii)
Group companies
The results and financial position of all entities within the Group (none of which has the currency of a hyperinflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation currency as follows:
(i)
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(ii)
income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions);
and
(iii)
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity. When a foreign
operation is disposed of or sold, such exchange differences that were recorded in equity are recognised in the income statements as part of the gain or loss on disposal.
