Singapore Airlines 2010 Annual Report Download - page 107

ANNUAL REPORT 2009/10
105
2 Summary of Significant Accounting Policies (continued)
(r) Impairment of financial assets (continued)
(i) Assets carried at amortised cost
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been
incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced
either directly or through the use of an allowance account. The impairment loss is recognised in the profit and
loss account.
When the asset becomes uncollectible, the carrying amount of the impaired financial asset is reduced directly or
if an amount was charged to the allowance account, the amounts charged to the allowance account are written
off against the carrying value of the financial asset.
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred,
the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor
and default or significant delay in payments.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment is
reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal
date. The amount of reversal is recognised in the profit and loss account.
(ii) Assets carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer
operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on
financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows discounted at the current
market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.
(iii) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor,
and the disappearance of an active trading market are considerations to determine whether there is objective
evidence that investment securities classified as available-for-sale financial assets are impaired.
If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any
principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised
in the profit and loss account, is transferred from equity to the profit and loss account. Reversals of impairment
losses in respect of equity instruments are not recognised in the profit and loss account. Reversals of impairment
losses on debt instruments are recognised through the profit and loss account if the increase in fair value of the
debt instrument can be objectively related to an event occurring after the impairment loss was recognised in the
profit and loss account.