Singapore Airlines 2011 Annual Report Download - page 105

ANNUAL REPORT 2010/2011 103
NOTES TO THE FINANCIAL STATEMENTS
31 March 2011
2 Summary of Significant Accounting Policies (continued)
(e) Intangible assets
(i) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the
cost of the business combination over the Group’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured
at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, at least
annually or more frequently if events or changes in circumstances indicate that the carrying value
may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units (“CGU”), or groups of CGUs,
that are expected to benefit from the synergies of the combination, irrespective of whether other
assets or liabilities of the Group are assigned to those units or groups of units.
The CGU (or group of CGUs) to which goodwill has been allocated is tested for impairment annually
and whenever there is an indication that the CGU may be impaired. Impairment is determined
for goodwill by assessing the recoverable amount of each CGU (or group of CGU) to which the
goodwill relates. Where the recoverable amount of the CGU (or group of CGUs) is less than the
carrying amount, an impairment loss is recognised in the profit and loss account. Impairment
losses recognised for goodwill are not reversed in subsequent periods.
Where goodwill forms part of a CGU (or group of CGUs) and part of the operation within that
unit is disposed of, the goodwill associated with the operation disposed of is included in the
carrying amount of the operation when determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured based on the relative fair values of the
operation disposed of and the portion of the CGU retained.
(ii) Computer software
Computer software acquired separately is measured initially at cost. Following initial acquisition,
computer software is stated at cost less accumulated amortisation and accumulated impairment
losses, if any. These costs are amortised using the straight-line method over their estimated useful
lives of 1 to 5 years and assessed for impairment whenever there is an indication that the computer
software may be impaired. The amortisation period and method are reviewed at least annually.
(iii) Licences
Licences were acquired in business combinations. These intangible assets are amortised on a
straight-line basis over its estimated useful life of 3 years.
(iv) Deferred engine development cost
This relates to the Group’s share of engine development payments made in connection with
its participation in aircraft engine development projects with other companies. Amortisation of
such intangibles begins only when the aircraft engines are available for sale. These deferred
engine development costs are amortised on a straight-line basis over the period of expected
sales of the aircraft engines, which is estimated to be over a period of 20 years. The amortisation
period and amortisation method would be reviewed annually in light of experience and changing
circumstances, and adjusted prospectively, as appropriate at the end of each reporting period.