Singapore Airlines 2007 Annual Report Download - page 85

Singapore Airlines 83 Annual Report 2006-07
2 Accounting Policies (continued)
(f) Foreign currencies (continued)
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.
(g) Fixed assets
Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses, if any. The cost of
an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for
its intended use. The cost of all aircraft is stated net of manufacturers’ credit. Aircraft and related equipment acquired
on an exchange basis are stated at amounts paid plus the fair value of the fi xed asset traded-in. Expenditure for
heavy maintenance visits on aircraft and engine overhauls, is capitalised at cost. Expenditure for engine overhaul
costs covered by “power-by-hour” (fi xed rate charged per hour) is capitalised by hours fl own. Expenditure for other
maintenance and repairs is charged to the profi t and loss account. When assets are sold or retired, their costs,
accumulated depreciation and accumulated impairment losses, if any, are removed from the fi nancial statements and
any gain or loss resulting from their disposal is included in the profi t and loss account.
(h) Depreciation of fi xed assets
Fixed assets are depreciated on a straight-line basis at rates which are calculated to write-down their cost to their
estimated residual values at the end of their operational lives. Operational lives and residual values are reviewed
annually in the light of experience and changing circumstances, and adjusted as appropriate at each balance sheet
date.
Fully depreciated assets are retained in the fi nancial statements until they are no longer in use. No depreciation is
charged after assets are depreciated to their residual values.
(i) Aircraft fl eet
The Group depreciates its new passenger aircraft, spares and spare engines over 15 years to 10% residual values.
For used passenger aircraft, the Group depreciates them over the remaining life (15 years less age of aircraft) to
10% residual values.
The Group depreciates its new freighter aircraft over 15 years to 20% residual values. For used freighter aircraft,
the Group depreciates them over the remaining life (15 years less age of aircraft) to 20% residual value.
Major inspection costs relating to heavy maintenance visits and engine overhauls (including inspection costs
provided under “power-by-hour” contracts) are capitalised and depreciated over the average expected life
between major overhauls, estimated to be 4 to 6 years.
(ii) Land and buildings
Buildings on freehold land and leasehold land and buildings are depreciated to nil residual values as follows:
Company owned offi ce premises – according to lease period or 30 years, whichever is the shorter.
Company owned household premises – according to lease period or 10 years, whichever is the shorter.
Other premises – according to lease period or 5 years, whichever is the shorter.
(iii) Flight training equipment
Flight simulators and training aircraft are depreciated over 10 years to nil residual values, and 5 years to 20%
residual values respectively.
(iv) Other fi xed assets
Other fi xed assets are depreciated over 1 to 12 years to nil residual values.
NOTES TO THE FINANCIAL STATEMENTS
31 March 2007