Singapore Airlines 2007 Annual Report Download - page 83

Singapore Airlines 81 Annual Report 2006-07
2 Accounting Policies (continued)
(c) Consolidation
The consolidated fi nancial statements comprise the separate fi nancial statements of the Company and its subsidiaries
as at the balance sheet date. Consistent accounting policies are applied for like transactions and events in similar
circumstances. A list of the Group’s subsidiary companies is shown in Note 20 to the fi nancial statements.
All intra-group balances, transactions, income and expenses and profi ts and losses resulting from intra-group
transactions are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control,
and continue to be consolidated until the date that such control ceases.
Acquisitions of subsidiaries are accounted for using the purchase method. The cost of an acquisition is measured
as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the acquisition. Identifi able assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interests.
Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifi able
assets, liabilities and contingent liabilities represents goodwill. The goodwill is accounted for in accordance with the
accounting policy for goodwill stated in Note 2 (e)(i) below.
Any excess of the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities
over the cost of business combination is recognised in the profi t and loss account on the date of acquisition.
Minority interests represent the portion of profi t or loss and net assets in subsidiaries not held by the Group. They are
presented in the consolidated balance sheet within equity, separately from the parent shareholders’ equity, and are
separately disclosed in the consolidated profi t and loss account.
(d) Subsidiary, associated and joint venture companies
In the Company’s separate fi nancial statements, investment in subsidiary, associated and joint venture companies are
accounted for at cost less impairment losses.
A subsidiary company is defi ned as a company in which the Group, directly or indirectly controls more than half of
the voting power, or controls the composition of the board of directors.
An associated company is defi ned as a company, not being a subsidiary company or joint venture company, in which
the Group has a long-term interest of not less than 20% and not more than 50% of the voting power and in whose
fi nancial and operating policy decisions the Group exercises signifi cant infl uence.
The Group’s investments in associates are accounted for using the equity method. Under the equity method, the
investment in associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of
net assets of the associate. The Group’s share of the profi t or loss of the associate is recognised in the consolidated
profi t and loss account. Where there has been a change recognised directly in the equity of the associate, the Group
recognises its share of such changes. After application of the equity method, the Group determines whether it is
necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate.
The associate is equity accounted for from the date the Group obtains signifi cant infl uence until the date the Group
ceases to have signifi cant infl uence over the associate. A list of the Group’s associated companies is shown in
Note 21 to the fi nancial statements.
A joint venture company is defi ned as a company, not being a subsidiary company, in which the Group has a
long-term interest of not more than 50% in the equity and has joint control of the company’s commercial and
fi nancial affairs.
The Group’s share of the results of the joint venture companies is recognised in the consolidated fi nancial statements
under the equity method on the same basis as associated companies. A list of the Group’s joint venture companies is
shown in Note 22 to the fi nancial statements.
The most recently available audited fi nancial statements of the associated and joint venture companies are used
by the Group in applying the equity method. Where the dates of the audited fi nancial statements used are not
co-terminous with those of the Group, the share of results is arrived at from the last audited fi nancial statements
available and unaudited management fi nancial statements to the end of the accounting period.
NOTES TO THE FINANCIAL STATEMENTS
31 March 2007