Singapore Airlines 2015 Annual Report Download - page 123

2 Summary of Significant Accounting Policies (continued)
(ad) Employee benefits (continued)
(ii) Defined benefit plans
The net defined benefit liability is the aggregate of the present value of the defined benefit obligation at the end of
the reporting period reduced by the fair value of plan assets (if any).
The cost of providing benefits under the defined benefits plans is determined separately for each plan using the
projected unit credit method.
Defined benefit costs comprise the following:
– Service cost
– Net interest on the net defined benefit liability
– Remeasurements of net defined benefit liability
Service costs which include current service costs, past service costs and gains or losses on non-routine
settlements are recognised as expense in profit or loss. Past service costs are recognised when plan amendment
or curtailment occurs.
Net interest on the net defined benefit liability is the change during the period in the net defined benefit liability
that arises from the passage of time which is determined by applying the discount rate to the net defined benefit
liability. Net interest on the net defined benefit liability is recognised as expense in profit or loss.
Remeasurements comprising actuarial gains and losses, and return on plan assets are recognised immediately in
other comprehensive income in the period in which they arise. Remeasurements are recognised in retained earnings
within equity and are not reclassified to profit or loss in subsequent periods.
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) Aircra maintenance and overhaul costs
The Group recognises aircra 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.
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