Singapore Airlines 2013 Annual Report Download - page 122

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SINGAPORE AIRLINES
NOTES TO THE FINANCIAL STATEMENTS
2 Summary of Significant Accounting Policies (continued)
(ab) Employee benefits (continued)
(i) Equity compensation plans (continued)
No expense is recognised for options or awards that do not ultimately vest, except for options or awards where
vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the
market condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The share-based compensation reserve is transferred to general reserve upon cancellation or expiry of the vested
options or awards. When the options are exercised or awards are released, the share-based compensation reserve
is transferred to share capital if new shares are issued.
(ii) Defined contribution plans
As required by law, the companies in Singapore make contributions to the Central Provident Fund scheme in
Singapore, a defined contribution scheme. Certain of the Group’s subsidiary companies and overseas stations
outside Singapore make contributions to their respective countries’ pension schemes. Such contributions are
recognised as an expense in the period in which the related service is performed.
(ac) Aircraft maintenance and overhaul costs
The Group recognises aircraft maintenance and overhaul expenses (except heavy maintenance visits, engine
overhaul and landing gear overhaul expenses) on an incurred basis. For engine overhaul costs covered by power-
by-hour third-party maintenance agreements, a portion of the cost is expensed at a fixed rate per hour during the
terms of the agreements.
(ad) Training and development costs
Training and development costs, including start-up programme costs, are charged to the profit and loss account in the
financial year in which they are incurred.
(ae) Borrowing costs
Borrowing costs incurred to finance advance and progress payments for aircraft are capitalised as part of advance and
progress payments until the aircraft are commissioned for operation or the projects are completed. All other borrowing
costs are recognised as finance charges in the period in which they are incurred.
(af) Claims and liquidated damages
Claims for liquidated damages, in relation to a loss of income, are recognised in the profit and loss account when a
contractual entitlement exists, the amount can be reliably measured and receipt is virtually certain. When the claims
do not relate to a compensation for loss of income, the amounts are taken to the statement of financial position as
deferred credit, included under deferred account, as a reduction to the cost of the assets when the assets are capitalised
and also for future reduction of operating lease expenses.
(ag) Derivative financial instruments and hedging
The Group uses derivative financial instruments such as forward currency contracts, foreign currency option contracts,
cross currency swap contracts, interest rate swap contracts, interest rate cap contracts, jet fuel option contracts, jet fuel
swap contracts and jet fuel collar contracts to hedge its risks associated with foreign currency, interest rate and jet fuel
price fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a
derivative contract is entered into, and are subsequently re-measured at fair value.
31 March 2013