Singapore Airlines 2012 Annual Report Download - page 113

111ANNUAL REPORT 2011/2012
Notes to the Financial Statements
31 March 2012
2 Summary of Significant Accounting Policies (continued)
(o)฀ Impairment฀of฀non-nancial฀assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of
the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating units’ (“CGU”) fair value less costs to sell
and its value-in-use and is determined for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets. In assessing value-in-use, the estimated future
cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. Where the
carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to
its recoverable amount.
For non-financial assets excluding goodwill and those with indefinite lives, an assessment is made at each reporting
date as to whether there is any indication that previously recognised impairment losses may no longer exist or may
have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the
asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in
the profit and loss account unless the asset is measured at revalued amount, in which case the reversal is treated as
a revaluation increase.
(p) Impairment of financial assets
The Group also assesses at the end of each reporting period whether a financial asset or a group of financial assets
is impaired.
(i) Assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment
exists individually for financial assets that are individually significant, or collectively for financial assets that
are not individually significant. If the Group determines that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets
with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually
assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in
a collective assessment of impairment.
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been
incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced
either directly or through the use of an allowance account. The impairment loss is recognised in the profit and
loss account.