Singapore Airlines 2007 Annual Report Download - page 89

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Singapore Airlines 87 Annual Report 2006-07
NOTES TO THE FINANCIAL STATEMENTS
31 March 2007
2 Accounting Policies (continued)
(s) Employee benefi ts (continued)
(i) Equity compensation plans (continued)
Equity-settled transactions
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date
on which the share options are granted. In valuing the share options, no account is taken of any performance
conditions, other than conditions linked to the price of the shares of the Company.
The cost of equity-settled transactions is recognised, together with a corresponding increase in the share-based
compensation reserve, over the period in which the service conditions are fulfi lled, ending on the date on which
the relevant employees become fully entitled to the award (“the vesting date”). Non-market vesting conditions are
included in the estimation of the number of shares under options that are expected to become exercisable on the
vesting date. At each balance sheet date, the Group revises its estimates of the number of shares under options
that are expected to become exercisable on the vesting date and recognises the impact of the revision of the
estimates in the income statement, with a corresponding adjustment to the share-based compensation reserve
over the remaining vesting period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional
upon a market condition, which are treated as vested irrespective of whether or not the market condition is
satisfi ed, provided that all other performance conditions are satisfi ed.
The share-based compensation reserve is transferred directly back to general reserve upon cancellation or expiry
of the vested options.
(ii) Defi ned contribution plans
As required by law, the companies in Singapore make contributions to the state pension scheme, the Central
Provident Fund (“CPF”). Certain of the Group’s companies and overseas stations outside Singapore make
contributions to their respective countries’ pension schemes. Such contributions are recognised as compensation
expenses in the same period as the employment that gave rise to the contributions.
(iii) Defi ned benefi t plans
The Group contributes to several defi ned benefi t pension and other post-employment benefi t plans for employees
stationed in certain overseas countries. The cost of providing benefi ts includes the Group’s contribution for the
year plus any unfunded liabilities under the plans, which is determined separately for each plan. Contributions
to the plans over the expected average remaining working lives of the employees participating in the plans are
expensed as incurred.
(t) Trade creditors
Trade creditors and amounts owing to subsidiary and associated companies are initially recognised at fair value and
subsequently measured at amortised cost using the effective interest method.
Gains and losses are recognised in the profi t and loss account when the liabilities are derecognised as well as
through the amortisation process.
(u) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a result of a
past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some
or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the profi t and loss account
net of any reimbursement.