Singapore Airlines 2016 Annual Report Download - page 118

Notes to the Financial Statements
31 March 2016
2 Summary of Significant Accounting Policies (continued)
(c) Standards issued but not yet eective (continued)
FRS 109 Financial Instruments
In December 2014, the Accounting Standards Council issued the final version of FRS 109 Financial Instruments which reflects all phases
of the financial instruments project and replaces FRS 39 Financial Instruments: Recognition and Measurement. The standard introduces
new requirements for classification and measurement, impairment and hedge accounting. FRS 109 is eective for the Group from 1 April
2018; early application is permitted. Retrospective application is required, but comparative information is not compulsory in the year of
adoption. The Groupis currently assessing the impact of FRS 109.
(d) Basis of consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated
in the consolidated financial statements. Unrealised gains arising from transactions with associated and joint venture companies are
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way
as unrealised gains, but only to the extent that there is no evidence of impairment.
Business combinations are accounted for by applying the acquisition method in accordance with FRS 103 Business Combinations as at the
acquisition date, which is the date on which control is transferred to the Group. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs,
other than those associated with the issue of debt or equity securities, are recognised as expenses in the periods in which the costs are
incurred and the services are received.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation
in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts entered into by the acquiree.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally
recognised in profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39
either in the profit and loss account or as a change to other comprehensive income. If the contingent consideration is classified as equity,
it is not remeasured until it is finally settled within equity.
In business combinations achieved in stages, previously held equity interest in the acquiree are remeasured to fair value at the acquisition
date and any corresponding gain or loss is recognised in the profit and loss account.
The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the
acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling
interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair
value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2(f).
In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in the profit and loss
account on the acquisition date.
Singapore Airlines116
FINANCIAL