BP 2008 Annual Report Download - page 197

BP Annual Report and Accounts 2008
Parent company financial statements of BP p.l.c.
1. Accounting policies continued
A credit representing the expected return on the plan assets during the year is included within other finance income. This credit is based on an
assessment made at the beginning of the year of long-term market returns on plan assets, adjusted for the effect on the fair value of plan assets of
contributions received and benefits paid during the year.
Actuarial gains and losses may result from: differences between the expected return and the actual return on plan assets; differences between
the actuarial assumptions underlying the plan liabilities and actual experience during the year; or changes in the actuarial assumptions used in the
valuation of the plan liabilities. Actuarial gains and losses, and taxation thereon, are recognized in the statement of total recognized gains and losses.
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 included in the statement of total recognized gains and losses 2008 2007 2006
Deferred tax
Origination and reversal of timing differences in the current year (1,434) 195 336
This comprises:
Actuarial (loss) gain relating to pensions and other post-retirement benefits (1,434) 195 336
Deferred tax
Deferred tax liability
Pensions 399 2,008 1,671
Deferred tax asset
Other taxable timing differences 77 123 165
Net deferred tax liability 322 1,885 1,506
Analysis of movements during the year
At 1 January 1,885 1,506 532
Exchange adjustments (276) 1 (18)
Charge for the year on ordinary activities 147 183 656
Charge (credit) for the year in the statement of total recognized gains and losses (1,434) 195 336
At 31 December 322 1,885 1,506
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