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80
Singapore Airlines Annual Report 05/06
2 Accounting Policies (continued)
(j) Leased assets (continued)
Operating lease – as lessee
Leases where the lessor effectively retains substantially all the risks and benefi ts of ownership of the leased assets are
classifi ed as operating leases. Operating lease payments are recognised as an expense in the profi t and loss account on a
straight-line basis over the lease term.
Gains or losses arising from sale and operating leaseback of aircraft are determined based on fair values. Differences between
sales proceeds and fair values are deferred and amortised over the minimum lease terms.
Major improvements and modifi cations to leased aircraft due to operational requirements are capitalised and depreciated
over the lease-term period.
Operating lease – as lessor
Aircraft leased out under operating leases are included under fi xed assets and are stated at cost less accumulated
depreciation and any impairment in value. Rental income is recognised on a straight–line basis over the lease term.
(k) Stocks
Stocks are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis. Net realisable
value is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale.
Work-in-progress is stated at cost plus estimated attributable profi t.
(l) Financial assets
Financial assets within the scope of FRS 39 are classifi ed as either fi nancial assets at fair value through profi t and loss, loans
and receivables, or available-for-sale assets, as appropriate. Financial assets are recognised on the balance sheet when the
Group becomes a party to the contractual provisions of the fi nancial instrument.
When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial assets not at fair
value through profi t and loss, directly attributable transaction costs. The Group determines the classifi cations of its fi nancial
assets after initial recognition, and where appropriate, re-evaluates this designation at each fi nancial year-end.
All regular way purchases and sales of fi nancial assets are recognised on the trade date. Regular way purchases or sales are
purchases or sales of fi nancial assets that require delivery of assets within the period generally established by regulation or
convention in the marketplace concerned.
Financial assets at fair value through profi t and loss
There are two sub-categories: fi nancial assets held for trading, and those designated as fair value through profi t or loss at
inception. A fi nancial asset is classifi ed in this category if acquired principally for the purpose of selling in the short term.
Derivatives are also classifi ed under this category unless they are designated as hedging derivatives. Gains or losses on
fi nancial instruments held at fair value through profi t and loss are recognised in the profi t and loss account.
Assets in this category are classifi ed as current assets.
Loans and receivables
Non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market are classifi ed
as loans and receivables. Such assets are carried at amortised cost using the effective interest method. Gains and losses are
recognised in the profi t and loss account when the loans and receivables are derecognised or impaired, as well as through the
amortisation process. Receivables are included in trade debtors on the balance sheet [Note 2(n)].
NOTES TO THE FINANCIAL STATEMENTS
31 March 2006