Singapore Airlines 2006 Annual Report Download - page 83

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Singapore Airlines Annual Report 05/06
2 Accounting Policies (continued)
(l) Financial assets (continued)
Available-for-sale investments
Available-for-sale investments are non-derivative fi nancial assets that are either designated in this category, or not classifi ed
in any other categories. After initial recognition, available-for-sale investments are measured at fair value with gains or losses
being recognised in the fair value reserve until the investment is derecognised or until the investment is determined to be
impaired at which time the cumulative gain or loss previously reported in equity is included in the profi t and loss account.
The fair value of quoted investments is generally determined by reference to stock exchange quoted market bid prices at the
close of the business on the balance sheet date. For investments where there is no active market, fair value is determined
using valuation techniques. Such techniques include using recent arm’s length market transactions or reference to the current
market value of another instrument (which is substantially the same). For investments where there is no active market and
where fair value cannot be reliably measured, they are measured at cost.
(m) Derecognition of fi nancial assets and liabilities
Financial assets
A fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of similar fi nancial assets) is
derecognised where:
(i) The contractual rights to receive cash fl ows from the asset have expired;
(ii) The Group retains the contractual rights to receive cash fl ows from the asset, but has assumed an obligation to pay
them in full without material delay to a third party under a “pass-through arrangement”; or
(iii) The Group has transferred its rights to receive cash fl ows from the asset and either has transferred substantially all the
risks and rewards of the assets, or has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
Where the Group has transferred its rights to receive cash fl ows from an asset and has neither transferred nor retained
substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent
of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over
the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
Where continuing involvement takes the form of a written and/or purchased option on the transferred asset, the extent of
the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the
case of a written put option on an asset measured at fair value, the extent of the Group’s continuing involvement is limited
to the lower of the fair value of the transferred asset and the option exercise price.
On derecognition of a fi nancial asset in its entirety, the difference between the carrying amount and the sum of the
consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that
has been recognised directly in equity is recognised in the profi t and loss account.
Gains and losses arising from derivative fi nancial instruments on foreign currencies, interest rates and jet fuel are recognised
at dates of maturity.
NOTES TO THE FINANCIAL STATEMENTS
31 March 2006