Singapore Airlines 2009 Annual Report Download - page 104

102
NOTES TO THE FINANCIAL STATEMENTS
31 March 2009
2 Accounting Policies (continued)
(i) Investment properties
Investment properties are initially recorded at cost. Subsequent to recognition, investment properties are
stated at cost less accumulated depreciation and accumulated impairment losses, if any.
Depreciation is provided on a straight-line basis so as to write off the cost of the leasehold investment
properties over its estimated useful lives according to the lease period or 30 years whichever is shorter.
Investment properties are derecognised when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefi t is expected from its disposal.
Any gains or losses on the retirement or disposal of an investment property are recognised in the profi t
and loss account in the year of retirement or disposal.
For a transfer from owner occupied property to investment property, the property is accounted for in
accordance with the accounting policy for property, plant and equipment set out in Note 2(g) up to the
date of change in use.
(j) Leases
(i) Finance lease – as lessee
Finance leases, which transfer to the Group substantially all the risks and benefi ts incidental to
ownership of the leased asset, are capitalised at the inception of the lease at the fair value of the
leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs
are also added to the amount capitalised. Lease payments are apportioned between fi nance charges
and reduction of the lease liability so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged directly against the profi t and loss account.
For sale and fi nance leaseback, differences between sales proceeds and net book values are taken
to the balance sheet as deferred gain on sale and leaseback transactions, included under deferred
account and amortised over the minimum lease terms.
Major improvements and modifi cations to leased aircraft due to operational requirements are
capitalised and depreciated over the average expected life between major overhauls (estimated
to be 4 to 6 years).
(ii) Operating lease – as lessee
Leases where the lessor effectively retains substantially all the risks and benefi ts of ownership of
the leased assets are classifi ed as operating leases. Operating lease payments are recognised as an
expense in the profi t and loss account on a straight-line basis over the lease term. The aggregate
benefi t of incentives provided by the lessor is recognised as a reduction of rental expense over the
lease term on a straight-line basis.