Singapore Airlines 2009 Annual Report Download - page 118

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NOTES TO THE FINANCIAL STATEMENTS
31 March 2009
3 Signifi cant Accounting Estimates
Estimates and assumptions concerning the future are made in the preparation of the fi nancial statements.
They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income
and expenses, and disclosures made. They are assessed on an ongoing basis and are based on experience
and relevant factors, including expectations of future events that are believed to be reasonable under
the circumstances.
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next fi nancial year are discussed below.
(i) Impairment of property, plant and equipment – aircraft fl eet
Impairment is recognised when events and circumstances indicate that the aircraft may be impaired
and the carrying amounts of the aircraft exceed the recoverable amounts. Recoverable amount is
defi ned as the higher of an aircraft’s fair value less costs to sell and its value-in-use. In determining
the recoverable amounts of the aircraft, certain estimates regarding the current fair market value of
the aircraft are made. The current fair market value is determined based on desktop valuations from
an independent appraisal for fl eet with similar operational lives. When value-in-use calculations are
undertaken, the Group uses discounted cash fl ow projections based on fi nancial budgets approved by
the management covering a specifi ed period.
(ii) Depreciation of property, plant and equipment – aircraft fl eet
Aircraft 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. Certain estimates regarding the operational
lives and residual values of the fl eet are made by the Group based on past experience and these are in line
with the industry. The operational lives and residual values are reviewed on an annual basis. The carrying
amount of the Group’s and the Company’s aircraft fl eet at 31 March 2009 was $12,448.2 million (2008:
$12,545.9 million) and $10,212.6 million (2008: $10,193.7 million) respectively.
(iii) Passenger revenue recognition
Passenger sales are recognised as operating revenue when the transportation is provided. The value
of unused tickets is included as sales in advance of carriage on the balance sheet and recognised
as revenue at the end of two years. This is estimated based on historical trends and experiences of
the Group whereby ticket uplift occurs mainly within the fi rst two years. The carrying amount of the
Group’s and the Company’s sales in advance of carriage at 31 March 2009 was $1,143.6 million
(2008: $1,680.3 million) and $1,111.6 million (2008: $1,647.0 million) respectively.