BP 2006 Annual Report Download - page 164

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162
43 Capital and reserves continued
Share capital
The balance on the share capital account represents the aggregate nominal value of all ordinary and preference shares in issue, including treasury
shares.
Share premium account
The balance on the share premium account represents the amounts received in excess of the nominal value of the ordinary and preference shares.
Capital redemption reserve
The balance on the capital redemption reserve represents the aggregate nominal value of all the ordinary shares repurchased and cancelled.
Merger reserve
The balance on the merger reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary shares issued in an
acquisition made by the issue of shares.
Other reserve
The balance on the other reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary shares to be issued
in the ARCO acquisition on the exercise of ARCO share options.
Own shares
Own shares represent BP shares held in Employee Share Ownership Plans (ESOPs) to meet the future requirements of the employee share-based
payment arrangements.
Treasury shares
Treasury shares represent BP shares repurchased and available for re-issue.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translations of the financial statements of foreign
operations. Upon disposal of foreign operations, the related accumulated exchange differences are recycled to the income statement. This reserve is
also used to record the effect of hedging net investments in foreign operations.
Available-for-sale investments
This reserve records the changes in fair value on available-for-sale investments. On disposal, the cumulative changes in fair value are recycled to the
income statement.
Cash flow hedges
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge. When the
hedged transaction occurs, the gain or loss on the hedging instrument is transferred out of equity to either profit or loss or the carrying value of assets,
as appropriate. If the forecast transaction is no longer expected to occur the gain or loss recognized in equity is transferred to profit or loss.
Share-based payment reserve
This reserve represents cumulative amounts charged to profit in respect of employee share-based payment arrangements where the scheme has not
yet been settled by means of an award of shares to an individual.
Profit and loss account
The balance held on this reserve is the accumulated retained profits of the group.