Rotable spare parts, furniture and equipment, net
Rotable spare parts, furniture and equipment, are recorded at cost and are depreciated to estimated residual values over their estimated useful lives using the straight-line method.
Aircraft spare engines have significant parts with different useful lives; therefore, they are accounted for as separate items (major components) of rotable spare parts (Note 12d).
Pre-delivery payments refer to prepayments made to aircraft and engine manufacturers during the manufacturing stage of the aircraft.
The borrowing costs related to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset.
During the years ended December 31, 2017, 2016 and 2015, the Company capitalized borrowing costs which amounted to Ps.193,389, Ps.95,445 and Ps.90,057, respectively (Note 21). The rate used to determine the amount of borrowing cost was 3.30%, 2.88% and 2.80%, for the years ended December 31, 2017, 2016 and 2015, respectively.
Depreciation rates are as follows:
|
|
|
Annual |
|
|
Aircraft parts and rotable spare parts |
|
8.3-16.7% |
|
|
Aircraft spare engines |
|
4.0-8.3% |
|
|
Standardization |
|
Remaining contractual lease term |
|
|
Computer equipment |
|
25% |
|
|
Communications equipment |
|
10% |
|
|
Office furniture and equipment |
|
10% |
|
|
Electric power equipment |
|
10% |
|
|
Workshop machinery and equipment |
|
10% |
|
|
Service carts on board |
|
20% |
|
|
Leasehold improvements to flight equipment |
|
The shorter of: (i) remaining contractual lease term, or (ii) the next major maintenance event |
|
The Company reviews annually the useful lives and salvage values of these assets and any changes are accounted for prospectively.
The Company records impairment charges on rotable spare parts, furniture and equipment used in operations when events and circumstances indicate that the assets may be impaired or when the carrying amount of a long-lived asset or related cash generating unit exceeds its recoverable amount, which is the higher of (i) its fair value less cost to sell and (ii) its value in use.
The value in use calculation is based on a discounted cash flow model, using projections of operating results for the near future. The recoverable amount of long-lived assets is sensitive to the uncertainties inherent in the preparation of projections and the discount rate used in the calculation.
For the years ended December 31, 2017, 2016 and 2015, there were no indicators of impairment. No impairment charges were recorded in respect of the Company’s rotable spare parts, furniture and equipment.