Singapore Airlines 2015 Annual Report Download - page 109

2 Summary of Significant Accounting Policies (continued)
(e) Subsidiary, associated and joint venture companies
In the Company’s separate financial statements, investments in subsidiary and associated companies are accounted for
at cost less accumulated impairment losses.
A subsidiary company is an investee that is controlled by the Group. The Group controls an investee when it is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to aect those returns through
its power over the investee.
Thus, the Group controls an investee, if and only if, the Group has all of the following:
– power over the investee
– exposure, or rights to variable returns from its involvement with the investee; and
– the ability to use its power over the investee to aect its returns
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control listed above.
An associated company is an entity over which the Group has the power to participate in the financial and operating
policy decisions of the investee but does not have control or joint control of those policies. A list of the Group’s associated
companies is shown in Note 24 to the financial statements.
A joint venture company is a contractual arrangement whereby two or more parties undertake an economic activity
that is subject to joint control, where the strategic financial and operating decisions relating to the activity require the
unanimous consent of the parties sharing control. A list of the Group’s joint venture companies is shown in Note 25 to the
financial statements.
The Group accounts for its investments in associated and joint venture companies using the equity method from the date
on which it becomes an associated or joint venture company.
On acquisition of the investment, any excess of the cost of the investment over the Group’s share of the net fair value of
the investee’s identifiable assets and liabilities is accounted as goodwill and is included in the carrying amount of the
investment. Any excess of the Group’s share of the net fair value of the investee’s identifiable assets and liabilities over the
cost of the investment is included as income in the determination of the entity’s share of the associated or joint venture
company’s profit or loss in the period in which the investment is acquired.
Under the equity method, the investment in associated or joint venture companies are carried in the statement of
financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associated or joint venture
companies. The profit or loss reflects the share of results of operations of the associated or joint venture companies.
Distributions received from associated or joint venture companies reduce the carrying amount of the investment. Where
there has been a change recognised in other comprehensive income by the associated or joint venture companies, the
Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from
transactions between the Group and the associated or joint venture companies are eliminated to the extent of the interest
in the associated or joint venture companies.
When the Group’s share of losses in an associated or joint venture company equals or exceeds its interest in the associated
or joint venture company, the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the associated or joint venture company.
Singapore Airlines | Annual Report FY2014/15 |107