Singapore Airlines 2009 Annual Report Download - page 110

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NOTES TO THE FINANCIAL STATEMENTS
31 March 2009
2 Accounting Policies (continued)
(s) Financial liabilities (continued)
Financial liabilities are recognised initially at fair value, plus, in the case of fi nancial liabilities other than
derivatives, directly attributable transaction costs.
Subsequent to initial recognition, all fi nancial liabilities are measured at amortised cost using the effective
interest method, except for derivatives which are measured at fair value.
A fi nancial liability is derecognised when the obligation under the liability is extinguished. For fi nancial
liabilities other than derivatives, gains and losses are recognised in the profi t and loss account when the
liabilities are derecognised or impaired, and through the amortisation process. Any gains or losses arising
from changes in fair value of derivatives are recognised in the profi t and loss account, unless they are
designated as hedging derivatives.
(t) 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.
(u) Trade and other creditors
Trade and other 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.
(v) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outfl ow of economic resources will be required to settle the obligation
and the amount of the obligation can be estimated reliably. 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.
Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate.
If it is no longer probable that an outfl ow of economic resources will be required to settle the
obligation, the provision is reversed. If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that refl ects, where appropriate, the risks specifi c to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a
fi nance cost.