qantas airways limited is the major airline company in australia the company s state 4373098

Qantas Airways Limited is the major airline company in Australia. The company’s statement of financial position (balance sheet) as at June 30, 2009, is presented below in Exhibit 4-11. In Note 1(G) to the financial statements, Qantas describes its passenger, freight, and tours and travel revenue policy: Passenger and freight revenue is included in the Income Statement at the fair value of the consideration received net of sales discount, passenger and freight interline/IATA commission and GST. Tours and travel revenue is included in the Income Statement as the net amount of commission retained by Qantas. Passenger recoveries (including fuel surcharge on passenger tickets) are disclosed as part of net passenger revenue. Freight fuel surcharge is disclosed as part of net freight revenue. Other sales commissions paid by Qantas are included in expenditure. Passenger, freight and tours and travel sales are credited to revenue received in advance and subsequently transferred to revenue when passengers or freight are uplifted or when tours and travel air tickets and land content are utilized. Unused tickets are recognized as revenue using estimates regarding the timing of recognition based on the terms and conditions of the ticket. Changes in these estimation methods could have a material impact on the financial statements of Qantas. In Exhibit 4-11. Balance Sheets as at 30 June 2009 Required: a. Referring to the balance sheet, what was the value of the transportation that Qantas was committed to provide at year end in 2009 and 2008? b. Referring to the revenue recognition criteria, explain why Qantas’s revenue recognition policy is appropriate. c. Qantas passengers can earn frequent flyer miles each time they fly with Qantas. When passengers have earned enough frequent flyer miles, they can travel free on Qantas. How should Qantas account for these free trips? View Solution:
Qantas Airways Limited is the major airline company in Australia

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