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Notesonnancialstatements
Financial statements
1.Signicantaccountingpoliciescontinued
Foreign currency translation
Functionalcurrencyisthecurrencyoftheprimaryeconomicenvironmentin
whichanentityoperatesandisnormallythecurrencyinwhichtheentity
primarilygeneratesandexpendscash.
Inindividualcompanies,transactionsinforeigncurrenciesare
initiallyrecordedinthefunctionalcurrencybyapplyingtherateofexchange
rulingatthedateofthetransaction.Monetaryassetsandliabilities
denominatedinforeigncurrenciesareretranslatedintothefunctional
currencyattherateofexchangerulingatthebalancesheetdate.Any
resultingexchangedifferencesareincludedintheincomestatement.
Non-monetaryassetsandliabilities,otherthanthosemeasuredatfair
value,arenotretranslatedsubsequenttoinitialrecognition.
Intheconsolidatednancialstatements,theassetsandliabilitiesof
non-USdollarfunctionalcurrencysubsidiaries,jointlycontrolledentitiesand
associates,includingrelatedgoodwill,aretranslatedintoUSdollarsatthe
rateofexchangerulingatthebalancesheetdate.Theresultsandcash
owsofnon-USdollarfunctionalcurrencysubsidiaries,jointlycontrolled
entitiesandassociatesaretranslatedintoUSdollarsusingaverageratesof
exchange.Exchangeadjustmentsarisingwhentheopeningnetassetsand
theprotsfortheyearretainedbynon-USdollarfunctionalcurrency
subsidiaries,jointlycontrolledentitiesandassociatesaretranslatedintoUS
dollarsaretakentoaseparatecomponentofequityandreportedinthe
statementofcomprehensiveincome.Exchangegainsandlossesarisingon
long-termintragroupforeigncurrencyborrowingsusedtonancethe
group’snon-USdollarinvestmentsarealsotakentoequity.Ondisposalofa
non-USdollarfunctionalcurrencysubsidiary,jointlycontrolledentityor
associate,thedeferredcumulativeamountofexchangegainsandlosses
recognizedinequityrelatingtothatparticularnon-USdollaroperationis
reclassiedtotheincomestatement.
Business combinations and goodwill
Businesscombinationsareaccountedforusingtheacquisitionmethod.
Theidentiableassetsacquiredandliabilitiesassumedaremeasuredat
theirfairvaluesattheacquisitiondate.Thecostofanacquisitionis
measuredastheaggregateoftheconsiderationtransferred,measuredat
acquisition-datefairvalue,andtheamountofanyminorityinterestinthe
acquiree.Minorityinterestsarestatedeitheratfairvalueoratthe
proportionateshareoftherecognizedamountsoftheacquiree’sidentiable
netassets.Acquisitioncostsincurredareexpensedandincludedin
distributionandadministrationexpenses.
Goodwillismeasuredasbeingtheexcessoftheaggregateofthe
considerationtransferred,theamountrecognizedforanyminorityinterest
andtheacquisition-datefairvaluesofanypreviouslyheldinterestinthe
acquireeoverthefairvalueoftheidentiableassetsacquiredandliabilities
assumedattheacquisitiondate.
Attheacquisitiondate,anygoodwillacquiredisallocatedtoeachof
thecash-generatingunitsexpectedtobenetfromthecombination’s
synergies.Forthispurpose,cash-generatingunitsaresetatonelevel
belowabusinesssegment.
Followinginitialrecognition,goodwillismeasuredatcostlessany
accumulatedimpairmentlosses.Goodwillisreviewedforimpairmentannually
ormorefrequentlyifeventsorchangesincircumstancesindicatethatthe
carryingvaluemaybeimpaired.Impairmentisdeterminedbyassessingthe
recoverableamountofthecash-generatingunittowhichthegoodwillrelates.
Wheretherecoverableamountofthecash-generatingunitislessthanthe
carryingamount,animpairmentlossisrecognized.Animpairmentloss
recognizedforgoodwillisnotreversedinasubsequentperiod.
Goodwillarisingonbusinesscombinationspriorto1January2003
isstatedatthepreviouscarryingamount,lesssubsequentimpairments,
underUKgenerallyacceptedaccountingpractice.
Goodwillmayalsoariseuponinvestmentsinjointlycontrolled
entitiesandassociates,beingthesurplusofthecostofinvestmentover
thegroup’sshareofthenetfairvalueoftheidentiableassets.Such
goodwillisrecordedwithininvestmentsinjointlycontrolledentitiesand
associates,andanyimpairmentoftheinvestmentisincludedwithinthe
earningsfromjointlycontrolledentitiesandassociates.
Businesscombinationsundertakenpriorto2010wereaccountedforusing
theacquisitionmethodofaccountingbutthereweresomedifferencesinthe
accountingtreatmentcomparedtowhatisrequiredfor2010.SeeImpact of
new International Financial Reporting Standardsonpage157forfurther
information.Therewerenomaterialbusinesscombinationsundertakenprior
to2010intheperiodscoveredbythesenancialstatements.
Non-current assets held for sale
Non-currentassetsanddisposalgroupsclassiedasheldforsaleare
measuredatthelowerofcarryingamountandfairvaluelesscoststosell.
Non-currentassetsanddisposalgroupsareclassiedasheldforsale
iftheircarryingamountswillberecoveredthroughasaletransactionrather
thanthroughcontinuinguse.Thisconditionisregardedasmetonlywhen
thesaleishighlyprobableandtheassetordisposalgroupisavailablefor
immediatesaleinitspresentconditionsubjectonlytotermsthatareusual
andcustomaryforsalesofsuchassets.Managementmustbecommitted
tothesale,whichshouldbeexpectedtoqualifyforrecognitionasacompleted
salewithinoneyearfromthedateofclassicationasheldforsale.
Property,plantandequipmentandintangibleassetsonceclassied
asheldforsalearenotdepreciated.Thegroupceasestousetheequity
methodofaccountingonthedatefromwhichaninterestinajointly
controlledentityoraninterestinanassociatebecomesheldforsale.
Intangible assets
Intangibleassets,otherthangoodwill,includeexpenditureonthe
explorationforandevaluationofoilandnaturalgasresources,computer
software,patents,licencesandtrademarksandarestatedattheamount
initiallyrecognized,lessaccumulatedamortizationandaccumulated
impairmentlosses.Forinformationonexpenditureontheexplorationfor
andevaluationofoilandgasresources,seetheaccountingpolicyforoil
andnaturalgasexploration,appraisalanddevelopmentexpenditurebelow.
Intangibleassetsacquiredseparatelyfromabusinessarecarried
initiallyatcost.Theinitialcostistheaggregateamountpaidandthefair
valueofanyotherconsiderationgiventoacquiretheasset.Anintangible
assetacquiredaspartofabusinesscombinationismeasuredatfairvalue
atthedateofacquisitionandisrecognizedseparatelyfromgoodwillifthe
assetisseparableorarisesfromcontractualorotherlegalrights.
Intangibleassetswithanitelifeareamortizedonastraight-line
basisovertheirexpectedusefullives.Forpatents,licencesandtrademarks,
expectedusefullifeistheshorterofthedurationofthelegalagreement
andeconomicusefullife,andcanrangefromthreeto15years.Computer
softwarecostsgenerallyhaveausefullifeofthreetoveyears.
Theexpectedusefullivesofassetsarereviewedonanannualbasis
and,ifnecessary,changesinusefullivesareaccountedforprospectively.
Thecarryingvalueofintangibleassetsisreviewedforimpairment
whenevereventsorchangesincircumstancesindicatethecarryingvalue
maynotberecoverable.
Oil and natural gas exploration, appraisal and development
expenditure
Oilandnaturalgasexploration,appraisalanddevelopmentexpenditure
isaccountedforusingtheprinciplesofthesuccessfuleffortsmethod
ofaccounting.
Licence and property acquisition costs
Explorationlicenceandleaseholdpropertyacquisitioncostsarecapitalized
withinintangibleassetsandarereviewedateachreportingdatetoconrm
thatthereisnoindicationthatthecarryingamountexceedstherecoverable
amount.Thisreviewincludesconrmingthatexplorationdrillingisstill
underwayorrmlyplannedorthatithasbeendetermined,orworkis
underwaytodetermine,thatthediscoveryiseconomicallyviablebasedon
arangeoftechnicalandcommercialconsiderationsandsufcientprogress
isbeingmadeonestablishingdevelopmentplansandtiming.Ifnofuture
activityisplanned,theremainingbalanceofthelicenceandproperty
acquisitioncostsiswrittenoff.Lowervaluelicencesarepooledand
amortizedonastraight-linebasisovertheestimatedperiodofexploration.
Uponrecognitionofprovedreservesandinternalapprovalfordevelopment,
therelevantexpenditureistransferredtoproperty,plantandequipment.
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