IAS 16 para 51, IAS 8 paras 39,40, change in useful lives of aircraft and engines

TUI AG – Annual report – 30 September 2017

Industry: leisure

Principles and methods underlying the Consolidated Financial Statements (extract 1)

Property, plant and equipment (extract)

Depreciation of property, plant and equipment is based on the straight-line method, based on the customary useful lives. The useful economic lives are as follows:

Useful lives of property, plant and equipment
  Useful lives
Hotel buildings 30 to 40 years
Other buildings 25 to 50 years
Cruise ships 30 to 40 years
Aircraft  
Fuselages and engines 22 to 25 years
Engine overhaul depending on intervals, up to 12 years
Major overhaul depending on intervals, up to 12 years
Spare parts up to 12 years
Operating and business equipment 3 to 10 years

Principles and methods underlying the Consolidated Financial Statements (extract 2)

Changes in estimates

Until the end of financial year 2016, new aircraft and engines were depreciated to a projected residual value in line with market terms over a period of up to 18 years.

In the framework of an adjusted fleet strategy, the expected useful lives of aircraft and engines used by TUI Group have changed. Aircraft and engines will therefore be depreciated over a period of up to 25 years to a residual value of a maximum of 5 per cent, depending on the aircraft type, with effect from 1 October 2016.

In line with IAS 8, the adjustment of the useful lives and associated residual values was carried out on a prospective basis as the revision of an accounting estimate. Retroactive changes of prior reporting periods were therefore not recognised.

Due to the revision of the accounting estimate relating to useful lives, scheduled depreciation declined by EUR 20.3 m in financial year 2017. In line with the Group’s plans, the adjustments of useful lives and residual values will result in a decline in depreciation of around EUR 25 m in the next three financial years.

 

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