Singapore Airlines 2014 Annual Report Download - page 124

122
NOTES TO THE FINANCIAL STATEMENTS
31 March 2014
SINGAPORE AIRLINES
2 Summary of Significant Accounting Policies (continued)
(t)฀ Loans,฀notes฀payable฀and฀borrowings
Loans, notes payable and other borrowings are initially recognised at the fair value of the consideration received less
directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest method.
Gains and losses are recognised in the profit and loss account when the liabilities are derecognised as well as through
the amortisation process.
(u) Trade and other creditors
Trade and other creditors and amounts owing to subsidiary and associated companies are initially recognised at fair
value and subsequently measured at amortised cost using the effective interest method.
Gains and losses are recognised in the profit and loss account when the liabilities are derecognised as well as through
the amortisation process.
(v) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the
obligation can be estimated reliably. Where the Group expects some or all of a provision to be reimbursed, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the profit and loss account net of any reimbursement.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is
no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is
reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.
Provision for warranty claims is made for engine overhaul, repairs and maintenance of aircraft (excluding line
maintenance) based on past experience of the level of repairs.
Provision for return costs to meet contractual return aircraft minimum conditions, at the end of the lease terms for the
aircraft under operating leases, are recorded equally over the lease terms.
(w) Maintenance reserve
Maintenance reserve relates to payments made by the lessee for maintenance activities undertaken during the lease
period. The Group will reimburse the lessee for agreed maintenance work done as and when incurred. The Group
records the amounts received as maintenance reserve. At the expiry of the lease term, excess maintenance reserve is
recognised in the profit and loss account.
(x) Share capital and share issuance expenses
Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly
attributable to the issuance of ordinary shares are deducted against share capital.