Singapore Airlines 2016 Annual Report Download - page 125

2 Summary of Significant Accounting Policies (continued)
(j) Leases (continued)
(ii) Operating lease – as lessee (continued)
Major improvements and modifications to leased aircra due to operational requirements are capitalised and depreciated over the
remaining lease term period or, where appropriate, the average expected life between major overhauls (estimated to be 4 to 10 years).
(iii) Operating lease – as lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases.
Aircra leased out under operating leases are included under property, plant and equipment and are stated at cost less accumulated
depreciation and accumulated impairment losses, if any. Rental income is recognised on a straight-line basis over the lease term.
(k) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes expenditure
incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and condition. Net realisable
value is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale. Where necessary,
allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and
net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated
costs necessary to make the sale.
(l) Financial assets
The Group initially recognises loans and receivables on the date they are originated. All other financial assets are recognised in the
statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.
The Group determines the classification of its financial assets at initial recognition.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not measured at fair
value through profit or loss, directly attributable transaction costs.
A financial asset is derecognised when the contractual right to receive cash flows expires, or when the Group transfers the rights to receive
the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards from ownership of the
financial asset are transferred, or the Group neither transfers nor retains substantially all of the risks and rewards of ownership and
does not retain control over the transferred asset. Any interest in transferred financial assets that is created or retained by the Group is
recognised as a separate asset or liability. On derecognition of a financial asset in its entirety, the dierence between the carrying amount
and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is
recognised in the profit and loss account.
All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, i.e., the date that the Group
commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of
assets within the period generally established by regulation or convention in the marketplace concerned.
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