Ryan Shusterman Case

It is important to analyze the presentation of the financial statements as this will make it easier to interpret and understand the importance of the importance and will facilitate comparability. Air Canada is a public profit-oriented corporation that operates under IFRS standards as adopted by Canadian GAAP for public corporations on January 1, 2011. Therefore statements ending December 31, 2011 were presented in accordance IFRS standards. Air Canada also restated statements ending December 31, 2010 using IFRS so as to make these reports more comparable. The reconciliation of the December 31, 2010 from previous Canadian GAAP to IFRS is discussed in note 25 of the financial statements.

Air Canada's financial statements include a significant amount of information within its notes as opposed to putting it on the face of the financial statements. This is largely due to the significant amount of information; therefore accounts in the consolidated financial statements are abbreviated on the face of the statements, with specifics within the notes. This is the case for all the financial statements and especially important on the balance sheet, where specific information regarding assets, liabilities and shareholder's equity is often of relevance. While one can get a decent overview just by looking at the face of the statements, it will often be important to look at the notes to get more detail and a better overview of the entity's financial state, especially concerning assets and liabilities, whose notes often hold relevant information. In general, the notes should be looked at for several accounts where simply the net amount doesn't provide enough relevant information for users. The notes themselves contain supporting schedules as well, especially notes regarding long term assets. This information is relevant to understand and analyze the investments of the entity.

The balance sheet is classified by current assets and liabilities before non-current assets and liabilities, respectively, to emphasize relevance of current assets and liabilities. Air Canada presents a statement of operations and then includes any net gain/loss from this statement into the statement of comprehensive income. This emphasized the net gain/loss from operations. Air Canada does not have any current discontinued operations and therefore no assets held for sale. However, when there are assets held for sale, they are recognized at the lower of carrying value and fair value less costs to sell.

Air Canada presents its expenses mostly by nature while those presented by function are categories of expenses, with the nature of the individual expenses being disclosed in the notes. While the presentation of those expenses by function can often provide more relevant information to users, the allocation of expenses to function should be analyzed so as to analyze any further relevant information regarding expenses. In addition, some of the expenses presented by nature are grouped together as one expense line, leaving out specifics and disclosing them in the notes. One example is the expense line for "Depreciation, amortization and impairment". It will likely be relevant to refer to the notes to understand the breakdown of depreciations, amortizations and impairment resulting in this net value. These depreciations, amortizations and impairments costs are included in the notes of the assets from which they resulted. The majority of this expense line is from depreciation of property and equipment as seen in Note 5 ('Property and Equipment). In the supporting schedule it shows $688 of depreciation from total property and equipment.

The statement of cash flow is reported using the indirect method. This means some further analysis should be done to examine the breakdown of cash inflows and outflows from operating activities, since specifics that are not disclosed directly on the cash flow statement may be of relevance. Examining the detail of where money is coming from and going will lead to a better understanding of the entity's cash flow. This analysis will make the information more useful and will make assessing trends or patterns of cash flow from operating activities as well as better assess the company's ability to generate net cash from operating activities.

Air Canada makes several estimates in reporting its financial statements. One especially critical estimate is depreciation. Air Canada deprecates each asset separately. Property and equipment, which make up most of the depreciation expense, are depreciated to the estimated residual value based on the straight line method. This seems appropriate as the property and equipment of Air Canada are long-lived assets and high end technologically and would likely depreciate