China Southern Airlines Limited changed its IFRS accounting policy from the revaluation model to the cost model during fiscal 2009 (year ended December 31) to improve the comparability of its financial results with other airlines. This was a voluntary change in accounting policy that was accounted for retrospectively.
On its statement of comprehensive income, China Southern Airlines reported a profit of renminbi (RMB) 6,415 million and an other comprehensive loss of RMB 15 million for 2010. It reported a profit of RMB 527 million and other comprehensive income of RMB 30 million for 2009.
China Southern Airlines also reported revenue, profit before income tax, and total assets, in addition to other selected information, for two segments-airline business (comprising passenger and cargo operations) and other (comprising aviation repair services, aviation training services, ground services, and catering services)-in the notes to its financial statements.
Instructions
(a) Explain how the change in accounting policy would affect China Southern Airlines' comparative financial statements presented for the years ended December 31, 2009 and 2010.
(b) Explain how the
(1) Change in accounting policy,
(2) Other comprehensive income,
(3) Segmented information would affect your analysis of China Southern Airlines' financial position and performance in 2009 and 2010.