Singapore Airlines 2007 Annual Report Download - page 88

Singapore Airlines 86 Annual Report 2006-07
NOTES TO THE FINANCIAL STATEMENTS
31 March 2007
2 Accounting Policies (continued)
(p) Taxation
(i) Current tax
Tax recoverable and tax liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the balance sheet date.
(ii) Deferred tax
Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for fi nancial reporting purposes.
Additionally the Group’s deferred tax liabilities include all taxable temporary differences associated with
investments in subsidiary, associated and joint venture companies, except where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences and, carry forward of unused tax
assets and losses, to the extent that it is probable that taxable profi t will be available against which the deductible
temporary differences and, carry forward of unused tax assets and losses, can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that suffi cient taxable profi ts will be available to allow all or part of the deferred tax
assets to be utilised. Unrecognised deferred income tax assets are reassessd at each balance sheet date and are
recognised to the extent that it has become probable that future taxable profi t will allow the deferred tax asset to
be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Deferred tax is charged or credited directly to equity if the tax relates to items that are credited or charged in the
same or a different period, directly to equity.
(q) Loans, notes payable and borrowings
Loans, notes payable and other borrowings are initially recognised at the fair value of the consideration received less
directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest method.
(r) Aircraft maintenance and overhaul costs
The Group recognises aircraft maintenance and overhaul expenses (except heavy maintenance visits and engine
overhaul expenses) on an incurred basis. For engine rectifi cation costs covered by “power-by-hour” third-party
maintenance agreements, expenses are accrued on the basis of hours fl own in accordance to the contractual terms.
Provision for aircraft maintenance and overhaul expenses to meet contractual return conditions for sale and
leaseback aircraft are accrued equally over the lease terms.
(s) Employee benefi ts
(i) Equity compensation plans
The Group has in place the Singapore Airlines Limited Employee Share Option Plan, the Singapore Airport
Terminal Services Limited Employee Share Option Plan and the SIA Engineering Company Limited Employee
Share Option Plan for granting of share options to senior executives and all other employees. The exercise price
approximates the market value of the shares at the date of grant.
The Group has also implemented the Singapore Airlines Limited Restricted Share Plan and Performance Share
Plan, the Singapore Airport Terminal Services Limited Restricted Share Plan and Performance Share Plan and the
SIA Engineering Company Limited Restricted Share Plan and Performance Share Plan for awarding of fully paid
ordinary shares to key senior management and senior executives, when and after pre-determined performance or
service conditions are accomplished.
Details of the plans are disclosed in Note 13 to the fi nancial statements.