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Accounting Policies of British Airways

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Cash generated from operating activities listed an operating loss of negative (231) million pounds and realized a gain of 732 million pounds from depreciation, amortization, and impairment. The statement shows 501 million pounds from operating cash flow before working capital changes. The working capital is the cash needed to operate the corporation on day-to-day (Schroeder, Clark, Cathey 2005). Cash flow from investment activities posted a negative (337) million-pound loss. Income flows come fromIncome from Passenger and Cargo TransactionThe policy notes contain how the company recognizes revenue from passengers and cargo is recorded when the transport of passenger and cargo occurs.

Passenger discount tickets are recorded as current liabilities as sales in advance of a carriage. Schroder defines income as psychic income, a satisfaction of a want, real income, an increase in wealth, and money income the realization of monetary valuation. The corporation recognizes other income when it occurs. Commission charges are recognized at the same time as the revenue it represents is recorded as operating budget expense. Airlines use frequent flyer miles as an advertising ploy to fill aircraft seats.

BA's frequent flyer program operates through its Executive Club. Besides free air travel, the company offers other rewards. BA records these as deferred liabilities until the owner exercises the option to cash in miles accumulated when the miles are recorded as revenue at the fair value of ticket prices at the time the revenue is recorded. Intangible assets such as Goodwill are recorded at cost or amortized on a straight-line basis. Cash and Cash EquivalentsCash is cash on hand and deposit in any financial institution payable on demand or maturing within three months after they were acquired and subject to an insignificant risk of the change in values.

Funds deposited and held to maturity are amortized cost. Gains and losses are recorded in income. Employee benefits recordedThe corporation reports its employee benefits in accordance with IAS 19 Employee benefits. Employee benefits are recognized as defined contribution plans or defined benefits plan.    

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preview essay on Accounting Policies of British Airways
  • Pages: 12 (3000 words)
  • Document Type: Essay
  • Subject: Business
  • Level: Undergraduate
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