BP 2011 Annual Report Download - page 289

Financial statements
BP Annual Report and Form 20-F 2011 PC5
Parent company financial statements of BP p.l.c.
The parent company financial statements of BP p.l.c. on pages PC1 – PC14 do not form part of BP’s Annual Report on Form 20-F as filed with the SEC.
1. Accounting policies continued
Deferred taxation
Deferred tax is recognized in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events
have occurred at that date that will result in an obligation to pay more, or a right to pay less, tax in the future.
Deferred tax assets are recognized only to the extent that it is considered more likely than not that there will be suitable taxable profits from which
the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse,
based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Use of estimates
The preparation of accounts in conformity with generally accepted accounting practice requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the accounts and the reported amounts of revenues and expenses during the reporting
period. Actual outcomes could differ from these estimates.
2. Taxation
$ million
Tax (credit) charge included in the statement of total recognized gains and losses 2011 2010
Deferred tax
Origination and reversal of timing differences in the current year (583) 123
This comprises:
Actuarial (loss) gain relating to pensions and other post-retirement benefits (583) 123
Deferred tax
Pensions –480
Other taxable timing differences –70
Net deferred tax liability (asset) –410
Analysis of movements during the year
At 1 January 410 149
Exchange adjustments 34 45
Charge (credit) for the year on ordinary activities 139 93
Charge (credit) for the year in the statement of total recognized gains and losses (583) 123
At 31 December –410
At 31 December 2011, deferred tax assets of $559 million on pensions (2010 nil) and $91 million on other timing differences (2010 nil) were not recognized
as it is not considered more likely than not that suitable taxable profits will be available in the company from which the future reversal of the underlying
timing differences can be deducted. It is anticipated that the reversal of these timing differences will benefit other group companies in the future.
3. Fixed assets – investments
$ million
Subsidiary
undertakings
Associated
undertakings
Shares Shares Loans Total
Cost
At 1 January 2011 122,723 2 2 122,727
Additions 3,719 – – 3,719
Disposals (8) – – (8)
At 31 December 2011 126,434 2 2 126,438
Amounts provided
At 1 January 2011 74 – 2 76
At 31 December 2011 74 – 2 76
Cost
At 1 January 2010 93,137 2 2 93,141
Additions 29,637 – – 29,637
Disposals (51) – – (51)
At 31 December 2010 122,723 2 2 122,727
Amounts provided
At 1 January 2010 74 – 2 76
At 31 December 2010 74 – 2 76
Net book amount
At 31 December 2011 126,360 2 – 126,362
At 31 December 2010 122,649 2 – 122,651