Singapore Airlines 2012 Annual Report Download - page 120

118 SINGAPORE AIRLINES
Notes to the Financial Statements
31 March 2012
2 Summary of Significant Accounting Policies (continued)
(ab) Employee benefits (continued)
(i) Equity compensation plans (continued)
No expense is recognised for options or awards that do not ultimately vest, except for options or awards where
vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the
market condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The share-based compensation reserve is transferred to general reserve upon cancellation or expiry of the
vested options or awards. When the options are exercised or awards are released, the share-based compensation
reserve is transferred to share capital if new shares are issued.
(ii) Defined contribution plans
As required by law, the companies in Singapore make contributions to the Central Provident Fund scheme in
Singapore, a defined contribution scheme. Certain of the Group’s subsidiary companies and overseas stations
outside Singapore make contributions to their respective countries’ pension schemes. Such contributions are
recognised as an expense in the period in which the related service is performed.
(ac) Aircraft maintenance and overhaul costs
The Group recognises aircraft maintenance and overhaul expenses (except heavy maintenance visits, engine
overhaul and landing gear overhaul expenses) on an incurred basis. For engine overhaul costs covered by power-
by-hour third-party maintenance agreements, a portion of the cost is expensed at a fixed rate per hour during the
terms of the agreements.
(ad) Training and development costs
Training and development costs, including start-up programme costs, are charged to the profit and loss account in the
financial year in which they are incurred.
(ae) Borrowing costs
Borrowing costs incurred to finance advance and progress payments for aircraft are capitalised as part of advance
and progress payments until the aircraft are commissioned for operation or the projects are completed. All other
borrowing costs are recognised as finance charges in the period in which they are incurred.
(af) Claims and liquidated damages
Claims for liquidated damages, in relation to a loss of income, are recognised in the profit and loss account when a
contractual entitlement exists, the amount can be reliably measured and receipt is virtually certain. When the claims
do not relate to a compensation for loss of income, the amounts are taken to the statement of financial position
as deferred credit, included under deferred account, as a reduction to the cost of the assets when the assets are
capitalised and also for future reduction of operating lease expenses.