Singapore Airlines 2011 Annual Report Download - page 108
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SINGAPORE AIRLINES
106
NOTES TO THE FINANCIAL STATEMENTS
31 March 2011
2 Summary of Significant Accounting Policies (continued)
(h) Depreciation of property, plant and equipment (continued)
(ii) Land and buildings
Freehold buildings, leasehold land and buildings are depreciated to nil residual values as follows:
Company owned office premises - according to lease period or 30 years, whichever
is the shorter.
Company owned household premises - according to lease period or 10 years, whichever
is the shorter.
Other premises - according to lease period or 5 years, whichever
is the shorter.
(iii) Others
Plant and equipment, office and computer equipment are depreciated over 1 to 7 years to nil
residual values.
(i) Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement at inception date: whether fulfillment of the arrangement is dependent on the use of a
specific asset or assets or the arrangement conveys a right to use the asset. For arrangements entered
into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with
the transitional requirements of INT FRS 104.
(i) Finance lease – as lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to
ownership of the leased asset, are capitalised at the inception of the lease at the fair value of
the leased asset or, if lower, at the present value of the minimum lease payments. Any initial
direct costs are also added to the amount capitalised. Lease payments are apportioned between
finance charges and reduction of the lease liability so as to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges are charged directly against the profit
and loss account.
For sale and finance leaseback, differences between sales proceeds and net book values are taken
to the statement of financial position as deferred gain on sale and leaseback transactions, included
under deferred account and amortised over the minimum lease terms.
Major improvements and modifications to leased aircraft due to operational requirements are
capitalised and depreciated over the average expected life between major overhauls (estimated to
be 4 to 6 years).