Singapore Airlines 2010 Annual Report Download - page 97

ANNUAL REPORT 2009/10
95
2 Summary of Significant Accounting Policies (continued)
(b) New and revised standards (continued)
The management expects that the adoption of the above pronouncements will have no material impact to the
financial statements in the period of initial application except for the following:
Revised FRS 24: Related Party Disclosures
The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other
whenever a person (or a close member of that person’s family) or a third party entity has control or joint control over
the entity, or has significant influence over the entity. The Group is currently determining the impact of the expanded
definition has on the disclosure of related party transactions. As this is a disclosure standard, it will have no impact
on the financial position or financial performance of the Group when implemented in 2011.
Revised FRS 103: Business Combinations and Amendments to FRS 27: Consolidated and Separate Financial Statements
The revised FRS 103 introduces a number of changes in the accounting for business combinations occurring after
1 July 2009. These changes will impact the amount of goodwill recognised, the reported results in the period that an
acquisition occurs, and future reported results. The Amendments to FRS 27 require that a change in the ownership
interest of a subsidiary company (without loss of control) is accounted for as an equity transaction. Therefore, such
transactions will no longer give rise to goodwill, nor will they give rise to a gain or loss. Furthermore, the amended
standard changes the accounting for losses incurred by the subsidiary company as well as the loss of control of
a subsidiary company. Other consequential amendments were made to FRS 7 Statement of Cash Flows, FRS 12
Income Taxes, FRS 21 The Effects of Changes in Foreign Exchange Rates, FRS 28 Investments in Associates and
FRS 31 Interests in Joint Ventures. The changes from revised FRS 103 and Amendments to FRS 27 will affect future
acquisitions or loss of control and transactions with minority interests. The standards may be early applied. However,
the Group does not intend to early adopt.
(c) Basis of consolidation
The consolidated financial statements comprise the separate financial statements of the Company and its subsidiary
companies as at the end of the reporting period. The financial statements of the subsidiary companies used in the
preparation of the consolidated financial statements are prepared for the same reporting date as the Company.
Consistent accounting policies are applied for like transactions and events in similar circumstances. A list of the
Group’s subsidiary companies is shown in Note 22 to the financial statements.
All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group
transactions are eliminated in full.
Acquisitions of subsidiary companies are accounted for using the purchase method. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and
recognised in equity. Any excess of the cost of the business combination over the Group’s share in the net fair value
of the acquired subsidiary company’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill
on the statement of financial position. The accounting policy for goodwill is set out in Note 2(e)(i). Any excess of the
Group’s share in the net fair value of the acquired subsidiary company’s identifiable assets, liabilities and contingent
liabilities over the cost of the business combination is recognised in the profit and loss account on the date of acquisition.