Singapore Airlines 2012 Annual Report Download - page 108

106 SINGAPORE AIRLINES
Notes to the Financial Statements
31 March 2012
2 Summary of Significant Accounting Policies (continued)
(f) Foreign currencies (continued)
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.
The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs
of bringing the asset to working condition for its intended use. The cost of all aircraft is stated net of manufacturers’
credit. Aircraft and related equipment acquired on an exchange basis are stated at amounts paid plus the fair value
of the fixed asset traded-in. Expenditure for heavy maintenance visits on aircraft, engine overhauls and landing gear
overhauls, is capitalised at cost. Expenditure for engine overhaul costs covered by power-by-hour (fixed rate charged
per hour) maintenance agreements is capitalised by hours flown. Expenditure for other maintenance and repairs is
charged to the profit and loss account. When assets are sold or retired, their costs, accumulated depreciation and
accumulated impairment losses, if any, are removed from the financial statements and any gain or loss resulting from
their disposal is included in the profit and loss account.
Leasehold hotel properties held by an associated company are carried at fair value, less accumulated depreciation
and accumulated impairment losses. Fair values of leasehold hotel properties are determined by independent
professional valuers on an annual basis. The Group’s share of the revaluation gain or loss is reflected under the share
of post-acquisition capital reserve.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit and loss
account in the year the asset is derecognised.