BP 2010 Annual Report Download - page 158
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Please find page 158 of the 2010 BP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Notesonnancialstatements
1.Signicantaccountingpoliciescontinued
Cash-settled transactions
Thecostofcash-settledtransactionsismeasuredatfairvalueand
recognizedasanexpenseoverthevestingperiod,withacorresponding
liabilityrecognizedonthebalancesheet.
Pensions and other post-retirement benets
Thecostofprovidingbenetsunderthedenedbenetplansis
determinedseparatelyforeachplanusingtheprojectedunitcreditmethod,
whichattributesentitlementtobenetstothecurrentperiod(todetermine
currentservicecost)andtothecurrentandpriorperiods(todeterminethe
presentvalueofthedenedbenetobligation).Pastservicecostsare
recognizedimmediatelywhenthecompanybecomescommittedtoa
changeinpensionplandesign.Whenasettlement(eliminatingall
obligationsforbenetsalreadyaccrued)oracurtailment(reducingfuture
obligationsasaresultofamaterialreductionintheschememembershipor
areductioninfutureentitlement)occurs,theobligationandrelatedplan
assetsareremeasuredusingcurrentactuarialassumptionsandthe
resultantgainorlossisrecognizedintheincomestatementduringthe
periodinwhichthesettlementorcurtailmentoccurs.
Theinterestelementofthedenedbenetcostrepresentsthe
changeinpresentvalueofschemeobligationsresultingfromthepassage
oftime,andisdeterminedbyapplyingthediscountratetotheopening
presentvalueofthebenetobligation,takingintoaccountmaterialchanges
intheobligationduringtheyear.Theexpectedreturnonplanassetsis
basedonanassessmentmadeatthebeginningoftheyearoflong-term
marketreturnsonplanassets,adjustedfortheeffectonthefairvalueof
planassetsofcontributionsreceivedandbenetspaidduringtheyear.
Thedifferencebetweentheexpectedreturnonplanassetsandthe
interestcostisrecognizedintheincomestatementasothernance
incomeorexpense.
Actuarialgainsandlossesarerecognizedinfullwithinother
comprehensiveincomeintheyearinwhichtheyoccur.
Thedenedbenetpensionplansurplusordecitinthebalance
sheetcomprisesthetotalforeachplanofthepresentvalueofthedened
benetobligation(usingadiscountratebasedonhighqualitycorporate
bonds),lessthefairvalueofplanassetsoutofwhichtheobligationsareto
besettleddirectly.Fairvalueisbasedonmarketpriceinformationand,in
thecaseofquotedsecurities,isthepublishedbidprice.
Contributionstodenedcontributionschemesarerecognizedinthe
incomestatementintheperiodinwhichtheybecomepayable.
Corporate taxes
Incometaxexpenserepresentsthesumofthetaxcurrentlypayableand
deferredtax.Interestandpenaltiesrelatingtotaxarealsoincludedin
incometaxexpense.
Thetaxcurrentlypayableisbasedonthetaxableprotsforthe
period.Taxableprotdiffersfromnetprotasreportedintheincome
statementbecauseitexcludesitemsofincomeorexpensethataretaxable
ordeductibleinotherperiodsanditfurtherexcludesitemsthatarenever
taxableordeductible.Thegroup’sliabilityforcurrenttaxiscalculatedusing
taxratesthathavebeenenactedorsubstantivelyenactedbythebalance
sheetdate.
Deferredtaxisprovided,usingtheliabilitymethod,onalltemporary
differencesatthebalancesheetdatebetweenthetaxbasesofassetsand
liabilitiesandtheircarryingamountsfornancialreportingpurposes.
Deferredtaxliabilitiesarerecognizedforalltaxabletemporary
differences:
• Exceptwherethedeferredtaxliabilityarisesongoodwillthatisnottax
deductibleortheinitialrecognitionofanassetorliabilityina
transactionthatisnotabusinesscombinationand,atthetimeof
thetransaction,affectsneithertheaccountingprotnortaxableprot
orloss.
• Inrespectoftaxabletemporarydifferencesassociatedwith
investmentsinsubsidiaries,jointlycontrolledentitiesandassociates,
exceptwherethegroupisabletocontrolthetimingofthereversalof
thetemporarydifferencesanditisprobablethatthetemporary
differenceswillnotreverseintheforeseeablefuture.
Deferredtaxassetsarerecognizedforalldeductibletemporarydifferences,
carry-forwardofunusedtaxcreditsandunusedtaxlosses,totheextent
thatitisprobablethattaxableprotwillbeavailableagainstwhichthe
deductibletemporarydifferencesandthecarry-forwardofunusedtax
creditsandunusedtaxlossescanbeutilized:
• Exceptwherethedeferredincometaxassetrelatingtothedeductible
temporarydifferencearisesfromtheinitialrecognitionofanassetor
liabilityinatransactionthatisnotabusinesscombinationand,atthe
timeofthetransaction,affectsneithertheaccountingprotnor
taxableprotorloss.
• Inrespectofdeductibletemporarydifferencesassociatedwith
investmentsinsubsidiaries,jointlycontrolledentitiesandassociates,
deferredtaxassetsarerecognizedonlytotheextentthatitisprobable
thatthetemporarydifferenceswillreverseintheforeseeablefuture
andtaxableprotwillbeavailableagainstwhichthetemporary
differencescanbeutilized.
Thecarryingamountofdeferredtaxassetsisreviewedateachbalance
sheetdateandreducedtotheextentthatitisnolongerprobablethat
sufcienttaxableprotwillbeavailabletoallowallorpartofthedeferred
incometaxassettobeutilized.
Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthat
areexpectedtoapplytotheyearwhentheassetisrealizedortheliabilityis
settled,basedontaxrates(andtaxlaws)thathavebeenenactedor
substantivelyenactedatthebalancesheetdate.
Taxrelatingtoitemsrecognizedinothercomprehensiveincome
isrecognizedinothercomprehensiveincomeandtaxrelatingtoitems
recognizedinequityisrecognizeddirectlyinequityandnotinthe
incomestatement.
Customs duties and sales taxes
Revenues,expensesandassetsarerecognizednetoftheamountof
customsdutiesorsalestaxexcept:
• Wherethecustomsdutyorsalestaxincurredonapurchaseofgoods
andservicesisnotrecoverablefromthetaxationauthority,inwhich
casethecustomsdutyorsalestaxisrecognizedaspartofthecostof
acquisitionoftheassetoraspartoftheexpenseitemasapplicable.
• Receivablesandpayablesarestatedwiththeamountofcustomsduty
orsalestaxincluded.
Thenetamountofsalestaxrecoverablefrom,orpayableto,thetaxation
authorityisincludedaspartofreceivablesorpayablesinthebalancesheet.
Own equity instruments
Thegroup’sholdingsinitsownequityinstruments,includingordinary
sharesheldbyEmployeeShareOwnershipPlans(ESOPs),areclassiedas
‘treasuryshares’,or‘ownshares’fortheESOPs,andareshownas
deductionsfromshareholders’equityatcost.Considerationreceivedfor
thesaleofsuchsharesisalsorecognizedinequity,withanydifference
betweentheproceedsfromsaleandtheoriginalcostbeingtakentothe
protandlossaccountreserve.Nogainorlossisrecognizedintheincome
statementonthepurchase,sale,issueorcancellationofequityshares.
156BPAnnualReportandForm20-F2010