Singapore Airlines 2012 Annual Report Download - page 114

112 SINGAPORE AIRLINES
Notes to the Financial Statements
31 March 2012
2 Summary of Significant Accounting Policies (continued)
(p) Impairment of financial assets (continued)
(i) Assets carried at amortised cost (continued)
When the asset becomes uncollectible, the carrying amount of the impaired financial asset is reduced directly or
if an amount was charged to the allowance account, the amounts charged to the allowance account are written
off against the carrying value of the financial asset.
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred,
the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor
and default or significant delay in payments.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment is
reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal
date. The amount of reversal is recognised in the profit and loss account.
(ii) Assets carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer
operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on
financial assets carried at 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 discounted at the current
market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.
(iii)฀ Available-for-sale฀nancial฀assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor,
and the disappearance of an active trading market are objective evidence that investment securities classified as
available-for-sale financial assets are impaired.
If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any
principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised
in the profit and loss account, is transferred from other comprehensive income to the profit and loss account.
Reversals of impairment losses in respect of equity instruments are not recognised in the profit and loss account;
increase in the fair value after impairment are recognised directly in other comprehensive income.
In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria
as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative
loss measured as the difference between the amortised cost and the current fair value, less any impairment loss
on that investment previously recognised in the profit and loss account. Future interest income continues to
be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the
future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of
finance income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be
objectively related to an event occurring after the impairment loss was recognised in the profit and loss account,
the impairment loss is reversed in the profit and loss account.