Kingfisher Air changed accounting treatment to show lower loss: Auditors

Bangalore: Kingfisher Airlines’ losses for 2008-09 would have been higher but for the changes in accounting treatment by the airline with respect to aircraft lease payments, according to its auditors.
In a filing with the Bombay Stock Exchange last week, the airline reported a loss after tax of Rs 1,608.83 crore for the year ending March 31, 2009.
The auditors have noted that the company has changed the accounting treatment for maintenance rent that it is liable to pay its lessors.
While such amounts have been charged to revenue in the past, now they are being treated as recoverable deposits by the lessor.
Such deposits will be adjusted against expenditure reimbursable from the lessors or when the agreements are terminated. The note further points out that certain lessors have accepted ‘stand by’ letters of credit issued by the bankers in lieu of payment of maintenance rent and have also agreed to refund or adjust the amounts already paid.
Consequently, amounts paid to lessors up to March 31, 2008 (net of expenses reimbursed wherever applicable) have been debited to deposits refundable.
But for this change in accounting treatment, the loss for the year before tax expense would have been higher by Rs 1,021.80 crore and after tax expense by Rs 985.51 crore.
07/08/09 BusinessLine

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Categories: Kingfisher Aug 2009