Singapore Airlines 2005 Annual Report Download - page 73

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SIA Annual Report 04/05 71
Notes to the Financial Statements
31 March 2005
CC
฀MOD: CN1323
M Y
C K
While every effort has been taken to carry out instruction to customers satisfaction
NO RESPONSIBILITY liablilty will be accepted for errors
CUSTOMERS ARE THEREFOREURGED TO CHECK THOROUGHLY BEFORE
AUTHORISING PRINTRUNS
DALIM
1 2 3 4 5 6 7 8 9 10 OK TS
CC196777 DLMAC13 10.06.2005 150#
1
3col
2 Accounting Policies (continued)
(c) Subsidiary, associated and joint venture companies (continued)
The most recent available audited financial statements of the associated and joint venture companies are used
by the Group in applying the equity method. Where the dates of the audited financial statements used are not
co-terminous with those of the Group, the share of results is arrived at from the last audited financial statements
available and unaudited management financial statements to the end of the accounting period.
(d) Goodwill
When subsidiary companies or interests in associated and joint venture companies are acquired, any excess of the
consideration over the fair value of the net assets as at the date of acquisition represents goodwill. Goodwill arising
from business combinations on or after 1 April 2001 is amortised using the straight-line method over a period of
between ten to twenty years. Goodwill is stated at cost less accumulated amortisation and any impairment losses.
Amortised goodwill arising from acquisition of associated and joint venture companies is reported net against the
share of results of associated and joint venture companies. Amortised goodwill arising from acquisition of subsidiary
companies is reported as a separate line item after operating profit.
Goodwill arising from business combinations prior to 1 April 2001 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 monetary 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 monthly into Singapore
dollars at the prevailing 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. 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 capitalised at cost 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.
(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.
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.