must be recognized in net income immediately as granted.
Asset ceiling and additionally liability test
Under IFRS, IFRIC 14, The limit on a defined benefit asset, minimum funding requirements and their interaction,
requires entities to consider minimum funding requirements when assessing the financial position of defined benefit
plans. This interpretation may require either a reduction of the retirement benefit asset or the recognition of an
additional liability. Canadian GAAP also set limits on the recognition of the retirement benefit asset, but did not
consider minimum funding requirements and as such could not create an additional liability.
Under Canadian GAAP, an adjustment arising from the asset ceiling was recognized in net income. Since the
Corporation has elected to recognize all actuarial gains and losses in OCI under IFRS, variations arising from this
test are also recognized in OCI in the period in which they occur.
Measurement date
Canadian GAAP allowed entities to use a measurement date for defined benefit obligations and plan assets up to three
months prior to the financial year-end date. December 31 was used as the measurement date for all of the
Corporation’s defined benefit plans under Canadian GAAP.
Measurement of the defined benefit obligations and plan assets is performed at the reporting date under IFRS.
Accordingly, defined benefit plans at BA and Corporate Office were measured using a January 31 measurement date
under IFRS during the fiscal year ended January 31, 2011. Defined benefit plans at BT continued to use a December
31 measurement date as this is the financial year-end date of BT.
Allocation of retirement benefit costs to inventories and aerospace program tooling
The adjustment to inventories and aerospace program tooling arises from changes in the presentation of retirement
benefit costs. The Corporation elected to segregate retirement benefit costs into three components under IFRS:
•
retirement benefit expense (including current and past service costs or credits) recorded in EBIT;
•
accretion on retirement benefit obligations and expected return on retirement plan assets recorded in financing
expense and financing income; and
•
actuarial gains and losses, asset ceiling and additional liability test and gains and losses on foreign exchange
recorded in OCI.
Under Canadian GAAP these three components were eventually all recorded in EBIT. As a result, only current service
costs are considered for capitalization in aerospace program tooling and inventories under IFRS, whereas under
Canadian GAAP all three components were considered for capitalization.
[...]
322 Chapter
5
C.
AEROSPACE PROGRAM TOOLING
Restatements related to aerospace program tooling are attributed to the following three elements.
Government refundable advances
As an incentive to stimulate R&D, some governments provide advances during the development period, which are
usually conditionally repaid upon delivery of the related product.
Under Canadian GAAP, contingently repayable advances received were deducted from aerospace program tooling or
R&D expenses, and any repayments were recorded as an expense in cost of sales upon delivery of the aircraft. Under
IFRS, a liability is recorded for the expected repayment of advances received if it is probable that the conditions for
repayment will be met. Repayments are recorded as a reduction of the liability. Revisions to the estimate of amounts
to be repaid result in an increase or decrease in the liability and aerospace program tooling or R&D expense, and a
cumulative catch-up adjustment to amortization is recognized immediately in net income.
As a result, aerospace program tooling is recorded gross of government refundable advances under IFRS, resulting
in a higher amortization expense in the earlier stages of an aircraft program’s life. Recording of government
refundable advances as a liability at transition decreased equity by $148 million as a significant portion of the related aerospace program tooling was amortized prior to February 1, 2010 under IFRS.
R&D expenditures incurred by vendors on behalf of the Corporation
As a new aircraft is developed, some vendors invest in the development of new technology (vendor non-recurring
costs or “VNR costs”). These costs may be repaid to the vendor as part of the purchase price of the vendor’s product,
and the technology is transferred to the Corporation once an agreed amount is repaid.
Under Canadian GAAP, the amounts repaid to vendors were recognized as aerospace program tooling ratably as the
vendor developed product was purchased. Under IFRS, upon evidence of successful development, which generally
occurs at a program’s entry-into-service, such VNR costs must be recognized as a liability based on the best estimate
of the amount to be repaid to the vendor, with a corresponding increase in aerospace program tooling.
As a result, VNR costs are recorded earlier under IFRS, based on the present value of the best estimate of the amounts
repayable, with consequential higher amortization of aerospace program tooling early in the program life.
Repayments to vendors are recorded as a reduction of the liability.
The adjustment at transition decreased equity by $70 million as a significant portion of the related aerospace program
tooling was amortized prior to February 1, 2010.
[...]
COMBINED IMPACT ON EBT OF ADJUSTMENTS TO AEROSPACE PROGRAM TOOLING
Fiscal year ended
Increase (decrease) in EBT
January 31, 2011
Decrease in amortization resulting from overall lower aerospace program tooling balance
$
33
Repayments of government refundable advances no longer recorded in EBIT
47
Change in estimates of the liability for government refundable advances
(14)
Foreign exchange loss upon translation of the liability for government refundable advances
(11)
Accretion expense on the liability for government refundable advances
(19)
Additional capitalization of borrowing costs due to a higher capitalization base for
programs under development
15
$ 51
[...]
First-time
adoption
323
E.
INCOME TAX IMPACT OF ALL RESTATEMENTS
The restatements to equity as at February 1, 2010 totalling $3,016 million affected the accounting values of assets and
liabilities but not their tax bases. Applying the Canadian statutory tax rate of 31.3% to these restatements would trigger the recognition of a deferred income tax asset of $944 million at the transition date. However, IFRS allows recognition
of a deferred income tax asset only to the extent it is probable that taxable profit will be available against which the
deductible temporary differences or unused income tax losses can be utilized. The deferred income tax asset has not been
fully recognized under IFRS, as some of the income tax benefits are expected to materialize in periods subsequent to the
period meeting the probability of recovery test necessary to recognize such assets. In connection with IFRS restatements
to equity at transition, $207 million of additional deferred income tax assets were recognized.
Applying the Canadian statutory tax rate of 30.0% to the IFRS adjustments for the fiscal year ended
January 31, 2011
would result in an income tax expense of $20 million. However, the probable future taxable profit that will be available to utilize operating losses and deductible temporary differences is lower under IFRS mainly due to the change in revenue
recognition policy for medium and large business aircraft, which delays revenue recognition until completion of the aircraft.
As a result, less deferred income tax benefits were recognized under IFRS during the fiscal year ended January 31, 2011.
The additional income tax expense as a result of all restatements for the fiscal year ended January 31, 2011 was $60 million.
RECONCILIATIONS OF STATEMENTS OF FINANCIAL POSITION AND INCOME FROM CANADIAN
GAAP TO IFRS
The following reconciliations illustrate the reclassifications and restatements from Canadian GAAP to IFRS to the
opening statement of financial position and to the statement of income for the fiscal year ended January 31, 2011.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT FEBRUARY 1, 2010
Cdn
Reclassi-
Restate-
Canadian GAAP line items
GAAP
fications
ments Items IFRS IFRS
line
items
Assets
Assets
Cash and cash equivalents
3,372
3,372
Cash and cash equivalents
Invested collateral
682
(682)
Receivables
1,897
(137)
(619)
B
1,141
Trade and other receivables
Aircraft financing
473
(473)
Inventories
5,268
62
2,300
A, B, D
7,630
Inventories
547
(10)
537
Other financial assets
500
19
B
519
Other
assets
11,692 (183)
1,690
13,199 Current
assets
Cdn
Reclassi-
Restate-
Canadian GAAP line items
GAAP
fications
ments Items IFRS IFRS
line
items
682
–
682
Invested
collateral
PP&E 1,643
46
(15)
1,674
PP&E
Aerospace program
1,439
(54)
(1), C
1,385
tooling
Intangible assets
1,696
(1,696)
Fractional ownership
deferred costs
271
(271)
Deferred income taxes
1,166
207
E
1,373
Deferred income taxes
Accrued benefit assets
1,070
(44)
(1,026)
A
Derivative financial
instruments 482
(482)
Goodwill 2,247
2,247
Goodwill
1,003
1,003
Other financial assets
Other assets
1,006
(455)
6
C, D
557
Other assets
9,581 222
(882)
8,921
Non-current
assets
21,273 39
808
22,120
324 Chapter
5
Liabilities
Liabilities
Accounts payable and
Trade and other
accrued liabilities
7,427
(4,230)
(152)
B, D
3,045
payables
1,180
(40)
B
1,140
Provisions
Advances and progress
Advances and progress
billings in excess of
billings in excess of
related long-term contact
related long-term
costs 1,899
1,899
contact inventories
Advances on aerospace
Advances on aerospace
programs 2,092
(1,374)
2,337
B
3,055
programs
Fractional ownership
deferred revenues
346
(346)
359
178
D
537
Other financial liabilities
1,989
(2)
D
1,987
Other
liabilities
11,764 (2,422) 2,321
11,663
Current
liabilities
677
(2)
675
Provisions
Advances on aerospace
1,373
1,373
programs
Deferred income taxes
65
(65)
Non-current portion of
Long-term debt
4,162
(11)
(17)
4,134
long-term debt
Accrued benefit liabilities
1,084
(59)
1,156 A 2,181
Retirement
benefits
Derivative financial
instruments 429
(429)
358
200
C
558
Other financial liabilities
617
(41)
576
Other
liabilities
5,740 2,461 1,296
9,497
Non-current
liabilities
17,504 39
3,617
21,160
Cdn
Reclassi-
Restate-
Canadian GAAP line items
GAAP
fications
ments Items IFRS IFRS
line
items
Preferred shares
347
347
Preferred shares
Common shares
1,324
1,324
Common shares
Contributed surplus
132
132
Contributed surplus
Retained earnings
2,087
(937)
A-E
1,150
Deficit – Other earnings
Deficit – Net actuarial
(1,973)
A,
E
(1,973)
losses
Accumulated OCI – AFS
Accumulated OCI – AFS
and cash flow hedges
(72)
(6)
(78)
and cash flow hedges
Accumulated OCI – CTA
(117)
117
(1)
–
Accumulated OCI – CCTD
Equity attributable to
Equity attributable to equity
equity holders of
holders of Bombardier Inc.
3,701
(2,799)
902
<
br /> Bombardier Inc.
Equity attributable to
Equity attributable to NCI
68
(10)
58
NCI
3,769
(2,809)
960
21,273 39
808
22,120
(1)
Restatements include effect of IFRS 1 optional exemptions.
First-time
adoption
325
CONSOLIDATED STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED JANUARY 31, 2011
Cdn
Reclassi-
Restate-
Canadian GAAP line items
GAAP
fications
ments Items IFRS IFRS
line
items
Revenues 17,712
180
B,
D
17,892
Revenues
Cost of sales
14,668
249
38
A-D
14,955
Cost of sales
3,044 (249) 142
2,937
Gross
margin
SG&A 1,369
7
1
A,
B
1,377
SG&A
R&D 193
160
(34)
A,
C
319
R&D
Other expense (income)
International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards Page 65