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## Use of estimates 

The preparation of financial statements in conformity with Canadian generally accepted accounting principles (GAAP) requires Management to make estimates and assumptions, particularly as they relate to accounting for long-term contracts, aerospace programs and employee future benefits. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from these estimates, and such differences could be material. 

## Translation of foreign currencies 

Foreign operations are classified as integrated or self-sustaining. All significant foreign operations are classified as self-sustaining operations. 

## a) Self-sustaining foreign operations 

All assets and liabilities are translated at exchange rates in effect at year end. Revenues and expenses are translated at the average exchange rates for the period. The resulting net gains or losses are included in deferred translation adjustment in the consolidated statements of shareholders’ equity. 

## b) Accounts in foreign currencies 

Accounts in foreign currencies as well as those of the integrated foreign operations, are translated using the temporal method. Under this method, monetary balance sheet items are translated at the exchange rates in effect at year end and non-monetary items are translated at historical exchange rates. Revenues and expenses (other than depreciation and amortization, which are translated at the same exchange rates as the related assets) are translated at the exchange rates in effect on the transaction dates or at the average exchange rates of the period. Translation gains or losses are included in the consolidated statements of income, except those related to debt designated as a hedge of the Corporation’s net investment in self-sustaining foreign operations, which are included in deferred translation adjustment in the consolidated statements of shareholders’ equity. 

## Cash and cash equivalents 

Cash and cash equivalents consist of cash and highly liquid investments, with maturities of three months or less from the date of acquisition. These securities are with investment grade financial institutions only. 

## Long-lived assets 

Long-lived assets comprise property, plant and equipment, assets under operating leases and depreciable intangible assets. 

Long-lived assets held for use are reviewed for impairment when certain events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability test is performed using undiscounted future net cash flows that are directly associated with the asset’s use and eventual disposition. The amount of the impairment, if any, is measured as the difference between the carrying value and the fair value of the impaired assets and presented as an additional current period depreciation charge or as special items. 

Long-lived assets held for sale are stated at the lower of cost or fair value. 

## a) Property, plant and equipment 

Property, plant and equipment are recorded at cost. Costs related to aerospace programs incurred once technical feasibility is proven and program launch takes place, including prototype design, development and testing, are accounted for as aerospace program tooling. Self-constructed aerospace program tooling includes interest charges incurred during construction. 

Depreciation is computed under the straight-line method over the following estimated useful lives as follows: 

<img src='content_image/71358.jpg'>

Depreciation of assets under construction begins when they are ready for their intended use. 

## b) Assets under operating leases 

Assets under operating leases are recorded at cost. Depreciation is computed under the straight-line method over periods representing their estimated useful lives. 

