Singapore Airlines 2011 Annual Report Download - page 101

ANNUAL REPORT 2010/2011 099
NOTES TO THE FINANCIAL STATEMENTS
31 March 2011
2 Summary of Significant Accounting Policies (continued)
(b) New and revised standards (continued)
FRS 103 Business Combinations (revised)
The revised FRS 103 introduces a number of changes to the accounting for business combinations that
will impact the amount of goodwill recognised, the reported results in the period that an acquisition
occurs, and future reported results. Changes in significant accounting policies resulting from the
adoption of the revised FRS 103 include:
• Transaction costs would no longer be capitalised as part of the cost of acquisition but will be
expensed immediately;
• Consideration contingent on future events are recognised at fair value on the acquisition date and
any changes in the amount of consideration to be paid will no longer be adjusted against goodwill
but recognised in profit or loss;
• The Group elects for each acquisition of a business, to measure non-controlling interests at fair
value, or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net
assets, and this impacts the amount of goodwill recognised; and
• When a business is acquired in stages, the previously held equity interests in the acquiree is
remeasured to fair value at the acquisition date with any corresponding gain or loss recognised in
profit or loss, and this impacts the amount of goodwill recognised.
According to its transitional provisions, the revised FRS 103 has been applied prospectively. Assets and
liabilities that arose from business combinations whose acquisition dates are before 1 April 2010 are
not adjusted.
FRS 27 Consolidated and Separate Financial Statements (revised)
Changes in significant accounting policies resulting from the adoption of the revised FRS 27 include:
• A change in the ownership interest of a subsidiary company that does not result in a loss of
control is accounted for as an equity transaction. Therefore, such a change will have no impact on
goodwill, nor will give rise to a gain or loss recognised in profit or loss;
• Losses incurred by a subsidiary company are allocated to the non-controlling interest even if the
losses exceed the non-controlling interest in the subsidiary company’s equity; and
• When control over a subsidiary company is lost, any interest retained is measured at fair value
with the corresponding gain or loss recognised in profit or loss.
According to its transitional provisions, the revised FRS 27 has been applied prospectively, and does
not impact the Group’s consolidated financial statements in respect of transactions with non-controlling
interests, attribution of losses to non-controlling interests and disposal of subsidiary companies before
1 April 2010. The changes will affect future transactions with non-controlling interests.