Singapore Airlines 2006 Annual Report Download - page 80

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Singapore Airlines Annual Report 05/06
2 Accounting Policies (continued)
(f) Intangible assets (continued)
(i) Goodwill (continued)
When determining goodwill, assets and liabilities of the acquired interest are translated using the exchange rate at the
date of acquisition if the fi nancial statements of the acquired interest are not denominated in SGD.
A cash-generating unit (or group of cash-generating units) to which goodwill has been allocated are tested for
impairment annually and whenever there is an indication that the unit may be impaired, by comparing the carrying
amount of the unit, including the goodwill, with the recoverable amount of the unit. Where the recoverable amount
of the cash-generating unit (or group of cash-generating units) is less than the carrying amount, an impairment loss is
recognised.
Where goodwill forms part of a cash-generating unit (or group of cash-generating units) and part of the operation within
that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the
operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
(ii) Computer software
Computer software is stated at cost less accumulated amortisation and accumulated impairment losses. These costs are
amortised using the straight-line method over their estimated useful lives of 1 – 5 years.
(g) Foreign currencies
The management has determined the currency of the primary economic environment in which the Company operates i.e.
functional currency, to be SGD. Sales prices and major costs of providing goods and services including major operating
expenses are primarily infl uenced by fl uctuations in SGD.
Foreign currency transactions are converted into SGD 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 fi nancial year.
All foreign currency monetary assets and liabilities are translated into SGD 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 taken to the profi t and loss account.
For the purposes of the Group fi nancial statements, the net assets of the foreign subsidiary, associated and joint venture
companies are translated into SGD at the exchange rates ruling at the balance sheet date. The fi nancial results of foreign
subsidiary, associated and joint venture companies are translated monthly into SGD at the prevailing exchange rates. The
resulting gains or losses on exchange are taken to foreign currency translation reserve.
Goodwill and fair value adjustments arising from the acquisition of foreign operations on or after 1 April 2005 are treated
as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations, and
translated at the closing rate at the balance sheet date.
Goodwill and fair value adjustments which arose on acquisitions of foreign subsidiaries before 1 April 2005 are deemed to be
assets and liabilities of the parent company and are recorded in SGD at the rates prevailing at the dates of acquisition.
On disposal of a foreign operation, the cumulative amount of exchange differences deferred in equity relating to that foreign
operation is recognised in the profi t and loss account as a component of the gain or loss on disposal.
NOTES TO THE FINANCIAL STATEMENTS
31 March 2006