BP 2014 Annual Report Download - page 134

12. Goodwill and impairment review of goodwill – continued
(2013 597mmboe per year). It is estimated that if production volume were to be reduced by approximately 5% for the whole period, this would cause
the recoverable amount to be equal to the carrying amount of goodwill and related non-current assets of the segment.
It is estimated that if the post-tax discount rate was approximately 10% for the entire portfolio this would cause the recoverable amount to be equal to
the carrying amount of goodwill and related non-current assets of the segment.
Downstream
$ million
2014 2013
Lubricants Other Total Lubricants Other Total
Goodwill 3,264 704 3,968 3,518 759 4,277
Cash flows for each cash-generating unit are derived from the business segment plans, which cover a period of two to five years. To determine the
value in use for each of the cash-generating units, cash flows for a period of 10 years are discounted and aggregated with a terminal value.
Lubricants
As permitted by IAS 36, the detailed calculations of the Lubricants unit’s recoverable amount performed in the most recent detailed calculation in 2013
were used for the 2014 impairment test as the criteria in that standard were considered satisfied: the headroom was substantial in 2013; there have
been no significant changes in the assets and liabilities; and the likelihood that the recoverable amount would be less than the carrying amount at the
time was remote.
The key assumptions to which the calculation of value in use for the Lubricants unit is most sensitive are operating unit margins, sales volumes, and
discount rate. The values assigned to these key assumptions reflect past experience. No reasonably possible change in any of these key assumptions
would cause the unit’s carrying amount to exceed its recoverable amount. Cash flows beyond the two-year plan period were extrapolated using a
nominal 3% growth rate.
13. Intangible assets
$ million
2014 2013
Exploration
and appraisal
expenditurea
Other
intangibles Total
Exploration
and appraisal
expenditurea
Other
intangibles Total
Cost
At 1 January 21,742 3,936 25,678 24,511 3,739 28,250
Exchange adjustments – (175) (175) – (5) (5)
Acquisitions – 455 455 –––
Additions 2,871 394 3,265 4,464 336 4,800
Transfers (993) – (993) (4,365) – (4,365)
Deletions (1,897) (342) (2,239) (2,868) (134) (3,002)
At 31 December 21,723 4,268 25,991 21,742 3,936 25,678
Amortization
At 1 January 877 2,762 3,639 1,077 2,541 3,618
Exchange adjustments – (72) (72) – (2) (2)
Charge for the year 3,029 304 3,333 2,710 267 2,977
Impairment losses –5050253 85 338
Transfers –––(365) – (365)
Deletions (1,527) (339) (1,866) (2,798) (129) (2,927)
At 31 December 2,379 2,705 5,084 877 2,762 3,639
Net book amount at 31 December 19,344 1,563 20,907 20,865 1,174 22,039
Net book amount at 1 January 20,865 1,174 22,039 23,434 1,198 24,632
aFor further information see Intangible assets within Note 1 and Note 6.
130 BP Annual Report and Form 20-F 2014