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2.
Summary of significant accounting policies (cont’d.)
2.5 Property, plant and equipment (cont’d.)
The useful lives for this purpose are as follows:
Aircraft
– engines, airframes and spare engines excluding service potential
25 years
– service potential of engines
8 years
– service potential of airframes
13 years
– service potential of spare engines
11 years
Aircraft spares
10 years
Aircraft fixtures and fittings
Useful life of aircraft or remaining lease
term of aircraft, whichever is shorter
Buildings
– hangar
50 years
Motor vehicles
5 years
Office equipment, furniture and fittings
5 years
Office renovation
5 years
Simulator equipment
25 years
Operating plant and ground equipment
5 years
In-flight equipment
5 years
Training equipment
5 years
Service potential of 8 years represents the period over which the expected cost of the first major aircraft engine overhaul is
depreciated. Subsequent to the engine overhaul, the actual cost incurred is capitalised and depreciated over the subsequent
8 years.
Service potential of 13 years represents the period over which the expected cost of the first major airframe check is depreciated.
Subsequent to the airframe check, the actual cost incurred is capitalised and depreciated over the subsequent 13 years.
Assets not yet in operation are stated at cost and are not depreciated until the assets are ready for their intended use. Useful
lives of assets are reviewed and adjusted if appropriate, at the balance sheet date.
Residual values, where applicable, are reviewed annually against prevailing market rates at the balance sheet date for
equivalent aged assets and depreciation rates are adjusted accordingly on a prospective basis. For the current financial year
ended 31 December 2017, the estimated residual value for aircraft airframes and engines excluding service potential is 10% of
their cost (2016: 10% of their cost).
An element of the cost of an acquired aircraft is attributed on acquisition to its service potential, reflecting the maintenance
condition of its engines and airframes. This cost, which can equate to a substantial element of the total aircraft cost, is amortised
over the shorter of the period to the next checks or the remaining life of the aircraft.
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AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS