Singapore Airlines 2016 Annual Report Download - page 128

Notes to the Financial Statements
31 March 2016
2 Summary of Significant Accounting Policies (continued)
(q) Impairment of financial assets (continued)
(i) Financial assets carried at amortised cost (continued)
When the asset becomes uncollectible, the carrying amount of the impaired financial asset is reduced directly or if an amount was
charged to the allowance account, the amounts charged to the allowance account are written o against the carrying value of the
financial asset.
To determine whether there is objective evidence that an impairment loss on a financial asset has been incurred, the Group considers
factors such as the probability of insolvency, significant financial diiculties of the debtor and default or significant delay in payments.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring aer the impairment was recognised, the previously recognised impairment is reversed to the extent that the carrying
amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the profit and
loss account.
(ii) Financial assets carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability
of insolvency or significant financial diiculties of the issuer) that an impairment loss on financial assets carried at cost has been
incurred, the amount of the loss is measured as the dierence between the asset’s carrying amount and the present value of
estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses
are not reversed in subsequent periods.
(iii) Available-for-sale financial assets
Significant or prolonged decline in the fair value below cost, significant financial diiculties of the issuer or obligor, and the
disappearance of an active trading market are objective evidence that investment securities classified as available-for-sale financial
assets are impaired.
If an available-for-sale asset is impaired, an amount comprising the dierence between its cost (net of any principal repayment
and amortisation) and its current fair value, less any impairment loss previously recognised in the profit and loss account, is
transferred from other comprehensive income to the profit and loss account. Reversals of impairment losses in respect of equity
instruments are not recognised in the profit and loss account; increase in the fair value aer impairment are recognised directly in
other comprehensive income.
In the case of non-equity investments classified as available-for-sale, impairment is assessed based on the same criteria as financial
assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the dierence
between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the
profit and loss account. Future interest income continues to be accrued based on the reduced carrying amount of the asset, using
the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is
recorded as part of finance income. If, in a subsequent year, the fair value of a non-equity investment increases and the increase can
be objectively related to an event occurring aer the impairment loss was recognised in the profit and loss account, the impairment
loss is reversed in the profit and loss account.
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