Singapore Airlines 2011 Annual Report Download - page 106

SINGAPORE AIRLINES
104
NOTES TO THE FINANCIAL STATEMENTS
31 March 2011
2 Summary of Significant Accounting Policies (continued)
(f) Foreign currencies
The management has determined the currency of the primary economic environment in which the
Company operates i.e., functional currency, to be SGD. Sales prices and major costs of providing goods
and services including major operating expenses are primarily influenced by fluctuations in SGD.
Foreign currency transactions are converted into SGD at exchange rates which approximate bank rates
prevailing at dates of transactions.
All foreign currency monetary assets and liabilities are translated into SGD using year-end exchange
rates. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the initial transactions. Non-
monetary assets and liabilities measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.
Gains and losses arising from conversion of monetary assets and liabilities are taken to the profit and
loss account.
For the purpose of the consolidated financial statements, the net assets of the foreign subsidiary,
associated and joint venture companies are translated into SGD at the exchange rates ruling at the
end of the reporting period. The financial results of foreign subsidiary, associated and joint venture
companies are translated monthly into SGD at the prevailing exchange rates. The resulting gains or
losses on exchange are recognised initially in other comprehensive income and accumulated under
foreign currency translation reserve.
Goodwill and fair value adjustments arising from the acquisition of foreign operations on or after
1 April 2005 are treated as assets and liabilities of the foreign operations and are recorded in the
functional currency of the foreign operations, and translated into SGD at the closing rate at the end of
the reporting period.
Goodwill and fair value adjustments which arose on acquisitions of foreign operations before
1 April 2005 are deemed to be assets and liabilities of the Group and are recorded in SGD at the rates
prevailing at the dates of acquisition.
On disposal of a foreign operation, the cumulative amount of exchange differences deferred in other
comprehensive income relating to that foreign operation is recognised in the profit and loss account
as a component of the gain or loss on disposal.
(g) Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition,
property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses, if any. The cost of an item of property, plant and equipment is recognised as an
asset if, and only if, it is probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably.