Singapore Airlines 2010 Annual Report Download - page 115

ANNUAL REPORT 2009/10
113
3 Significant Accounting Estimates
Estimates and assumptions concerning the future are made in the preparation of the financial 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 end of the reporting
period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below.
(i) Impairment of property, plant and equipment – aircraft fleet
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 defined 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 fleet with similar operational
lives. When value-in-use calculations are undertaken, the Group uses discounted cash flow projections based on
financial budgets approved by the management covering a specified period.
(ii) Depreciation of property, plant and equipment – aircraft fleet
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 fleet 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 fleet at 31 March 2010 was $12,474.9 million (2009: $12,448.2 million) and
$10,347.5 million (2009: $10,212.6 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 statement of financial position 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 first two years. The carrying amount of the Group’s and the
Company’s sales in advance of carriage at 31 March 2010 was $1,338.0 million (2009: $1,143.6 million) and
$1,301.9 million (2009: $1,111.6 million) respectively.