Singapore Airlines 2007 Annual Report Download - page 84

Singapore Airlines 82 Annual Report 2006-07
2 Accounting Policies (continued)
(e) Intangible assets
(i) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the 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. Following initial recognition, goodwill is measured at cost less any accumulated impairment
losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to
benefi t from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are
assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated:
• represents the lowest level within the Group at which the goodwill is monitored for internal management
purposes; and
• is not larger than a segment based on either the Group’s business or the Group’s geographical reporting
format.
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, if any.
These costs are amortised using the straight-line method over their estimated useful lives of 1 to 5 years.
(f) 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.
NOTES TO THE FINANCIAL STATEMENTS
31 March 2007