Singapore Airlines 2015 Annual Report Download - page 112

Notes to the Financial Statements
31 March 2015
2 Summary of Significant Accounting Policies (continued)
(g) Foreign currencies (continued)
Gains and losses arising from conversion of monetary assets and liabilities are taken to the profit and loss account.
For the purpose of the consolidated financial statements, the net assets of the foreign subsidiary, associated and joint
venture companies are translated into SGD at the exchange rates ruling at the end of the reporting period. The financial
results of foreign subsidiary, associated and joint venture companies are translated monthly into SGD at the prevailing
exchange rates. The resulting gains or losses on exchange are recognised initially in other comprehensive income and
accumulated under foreign currency translation reserve.
Goodwill and fair value adjustments arising from the acquisition of foreign operations on or aer 1 April 2005 are treated
as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations,
and translated into SGD at the closing rate at the end of the reporting period.
On disposal of a foreign operation, the cumulative amount of exchange dierences deferred in other comprehensive income
relating to that foreign operation is recognised in the profit and loss account as a component of the gain or loss on disposal.
(h) Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and
equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. The cost of an
item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably.
The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of
bringing the asset to working condition for its intended use. The cost of all aircra is stated net of manufacturers’ credit.
Aircra and related equipment acquired on an exchange basis are stated at amounts paid plus the fair value of the fixed
asset traded-in. Expenditure for heavy maintenance visits on aircra, engine overhauls and landing gear overhauls,
is capitalised at cost. Expenditure for engine overhaul costs covered by power-by-hour (fixed rate charged per hour)
maintenance agreements is recorded as advance payment and capitalised upon completion of an overhaul. Expenditure
for other maintenance and repairs is charged to the profit and loss account. When assets are sold or retired, their costs,
accumulated depreciation and accumulated impairment losses, if any, are removed from the financial statements and
any gain or loss resulting from their disposal is included in the profit and loss account.
Leasehold hotel properties held by an associated company are carried at fair value, less accumulated depreciation and
accumulated impairment losses. Fair values of leasehold hotel properties are determined by independent professional
valuers on an annual basis. The Group’s share of the revaluation gain or loss is reflected under the share of post-acquisition
capital reserve.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit and loss account in the year
the asset is derecognised.
(i) Depreciation of property, plant and equipment
Property, plant and equipment are depreciated on a straight-line basis at rates which are calculated to write down
their cost to their estimated residual values at the end of their operational lives. Operational lives, residual values
and depreciation method are reviewed annually in the light of experience and changing circumstances, and adjusted
prospectively, if appropriate.
Freehold land, advance and progress payments are not depreciated.
Fully depreciated assets are retained in the financial statements until they are no longer in use. No depreciation is charged
aer assets are depreciated to their residual values.
110 FINANCIAL