Singapore Airlines 2014 Annual Report Download - page 129

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ANNUAL REPORT FY2013/14
2 Summary of Significant Accounting Policies (continued)
(ad) Employee benefits (continued)
(ii) Defined benefit plans (continued)
Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Plan
assets are not available to the creditors of the Group, nor can they be paid directly to the Group. Fair value of
plan assets is based on market price information. When no market price is available, the fair value of plan assets
is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated
with the plan assets and the maturity or expected disposal date of those assets (or, if they have no maturity, the
expected period until the settlement of the related obligations).
The Group’s right to be reimbursed of some or all of the expenditure required to settle a defined benefit obligation
is recognised as a separate asset at fair value when and only when reimbursement is virtually certain.
(iii) 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.
(ae) 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.
(af) 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.
(ag) 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.
(ah) 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.