Singapore Airlines 2015 Annual Report Download - page 113

2 Summary of Significant Accounting Policies (continued)
(i) Depreciation of property, plant and equipment (continued)
(i) Aircra, spares and spare engines
The Group depreciates its new passenger aircra, spares and spare engines over 15 to 20 years to 5% to 10%
residual values.
The Group depreciates its new freighter aircra over 20 years to 5% residual values. For used freighter aircra, the
Group depreciates them over the remaining life (20 years less age of aircra) to 5% residual values.
Major inspection costs relating to landing gear overhauls, heavy maintenance visits and engine overhauls (including
inspection costs provided under power-by-hour maintenance agreements) are capitalised and depreciated over
the average expected life between major overhauls, estimated to be 4 to 10 years.
Training aircra are depreciated over 5 to 15 years to 10% to 20% residual values.
Flight simulators are depreciated over 5 to 10 years to nil residual values.
(ii) Land and buildings
Freehold buildings, leasehold land and buildings are depreciated to nil residual values as follows:
Company owned oice premises – according to lease period or 30 years, whichever is the shorter.
Company owned household premises – according to lease period or 10 years, whichever is the shorter.
Other premises – according to lease period or 5 years, whichever is the shorter.
Leasehold hotel properties held by – according to lease period of 99 years, up to 2081.
an associated company
(iii) Others
Plant and equipment, oice and computer equipment are depreciated over 1 to 15 years to nil residual values.
(j) Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at
inception date: whether fulfillment of the arrangement is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.
(i) Finance lease – as lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the
leased asset, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the
present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised.
Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against the
profit and loss account.
For sale and finance leaseback, dierences between sales proceeds and net book values are taken to the statement
of financial position as deferred gain or loss on sale and leaseback transactions, included under deferred account
and amortised over the minimum lease terms.
Major improvements and modifications to leased aircra due to operational requirements are capitalised and
depreciated over the average expected life between major overhauls (estimated to be 4 to 8 years).
Singapore Airlines | Annual Report FY2014/15 |111