Singapore Airlines 2003 Annual Report Download - page 75

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SIA Annual Report 02/03
Notes to the Financial Statements
31 March 2003
2 Accounting Policies (continued)
(d) Goodwill (continued)
Goodwill arising from business combinations prior to that date has been written-off against Group reserves in the
financial year in which it arose. When determining goodwill, assets and liabilities of the acquired interest are translated
using the exchange rate at the date of acquisition if the financial statements of the acquired interest are not
denominated in Singapore dollars.
(e) Foreign currencies
Foreign currency transactions are converted into Singapore dollars at exchange rates which approximate bank rates
prevailing at dates of transactions, after taking into account the effect of forward currency contracts which expired
during the financial year.
All foreign currency monetary assets and liabilities are translated into Singapore dollars using year-end exchange rates.
Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined.
Gains and losses arising from conversion of current assets and liabilities are dealt with in the profit and loss account.
For the purposes of the Group financial statements, the net assets of the foreign subsidiary, associated and joint
venture companies are translated into Singapore dollars at the exchange rates ruling at the balance sheet date. The
financial results of foreign subsidiary, associated and joint venture companies are translated into Singapore dollars at
the annual average exchange rates. The resulting gains or losses on exchange are taken to foreign currency translation
reserve.
(f) Fixed assets
Fixed assets are stated at cost less accumulated depreciation and any impairment in value. The cost of an asset
comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its
intended use. The cost of all aircraft is stated net of manufacturers’ credit, with subsequent expenditure stated at cost.
Aircraft and related equipment acquired on an exchange basis are stated at amounts paid plus the fair value of the
fixed asset traded-in. Expenditure for additions, improvements and renewal is capitalized and expenditure for
maintenance and repairs is charged to the profit and loss account. When assets are sold or retired, their costs and
accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal
is included in the profit and loss account.
The carrying amounts are reviewed at each balance sheet date to assess whether they are recorded in excess of
their recoverable amount, and if the carrying values exceed their recoverable amounts, assets are written-down.
In determining the recoverable amount for fixed asset, the higher of the net selling price and the value in use
of the fixed asset is considered.
(g) Depreciation of fixed assets
Fixed assets are depreciated on a straight-line basis at rates which are calculated to write-down their cost to their
estimated residual values at the end of their operational lives. Operational lives and residual values are reviewed
annually in the light of experience and changing circumstances.
Aircraft fleet
The Group depreciates its new passenger aircraft, spares and spare engines over 15 years to 10% residual values.
For used passenger aircraft, the Group depreciates them over the remaining life (15 years less age of aircraft) to 10%
residual values.
The Group depreciates its new freighter aircraft over 15 years to 20% residual values. For used freighter aircraft, the
Group depreciates them over the remaining life (15 years less age of aircraft) to 20% residual value.
Land and buildings
Buildings on freehold land and leasehold land and buildings are amortized to nil residual values as follows:
Company owned office premises – according to lease period or 30 years whichever is the shorter.
Company owned household premises – according to lease period or 10 years whichever is the shorter.
Leased premises – according to lease period or 5 years whichever is the shorter.
Flight training equipment
Flight simulators and training aircraft are depreciated over 10 years to nil residual values, and 5 years to 20% residual
values respectively.
Other fixed assets
These are depreciated over 1 to 12 years to nil residual values.
Fully depreciated assets are retained in the financial statements until they are no longer in use. No depreciation is
charged after assets are depreciated to their residual values.