Singapore Airlines 2016 Annual Report Download - page 130

Notes to the Financial Statements
31 March 2016
2 Summary of Significant Accounting Policies (continued)
(u) Trade and other creditors
Trade and other creditors and amounts owing to subsidiary and associated companies are initially recognised at fair value and subsequently
measured at amortised cost using the eective interest method.
Gains and losses are recognised in the profit and loss account when the liabilities are derecognised as well as through the amortisation
process.
(v) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event; it is probable
that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated
reliably. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset
but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the profit and loss account
net of any reimbursement.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable
that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the eect of the time value of
money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due
to the passage of time is recognised as a finance cost.
Provisions for return costs to meet contractual minimum conditions for the return of aircra, at the end of the lease terms for aircra
under operating leases, are recorded over the lease terms.
Other provisions include provisions for warranty claims, upgrade costs and end-of-lease liability. Provision for warranty claims is made
for engine overhaul, repairs and maintenance of aircra (excluding line maintenance) based on past experience of the level of repairs.
(w) Maintenance reserve
Maintenance reserve relates to receipts from the lessee for maintenance activities undertaken during the lease period. The Group reimburses
the lessee for agreed maintenance work done as and when incurred. The Group records the amounts received as maintenance reserve.
At the expiry of the lease term, excess maintenance reserve is recognised in the profit and loss account.
(x) Share capital and share issuance expenses
Proceeds from the issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the
issuance of ordinary shares are deducted against share capital, net of any tax eect.
(y) Treasury shares
When shares are reacquired by the Company, the amount of consideration paid which includes directly attributable costs, net of any tax
eect, is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity.
When treasury shares are subsequently sold or reissued pursuant to equity compensation plans, the cost of treasury shares is reversed
from the treasury share account and the realised gain or loss on sale or reissue, net of any directly attributable incremental transaction
costs, is recognised in the capital reserve. Voting rights related to treasury shares are nullified and no dividends are allocated to them.
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