Property, Plant and Equipment
Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and subsequent
accumulated impairment loss.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less
any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization.
When the property, plant and equipment are completed and ready for intended use, they are depreciated and
placed in the appropriate category.
Depreciation of the equipment in oil and gas production mine is computed using the unit-of-output method.
Depreciation of property, plant and equipment is computed using the fixed-percentage-on-declining-balance
method. Each significant part is depreciated separately. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimates
accounted for prospectively.
Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as
the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Investment Properties
Investment properties are properties held for earning rentals and/or for capital appreciation (including property
under construction for such purposes). Investment properties also include land held for a currently undetermined
future use.
Investment properties are measured initially at cost, including transaction costs. After initial recognition,
investment properties are measured at cost less accumulated depreciation and accumulated impairment loss.
Depreciation is recognized using the fixed-percentage-on-declining-balance method.
Any gain or loss on the derecognition of the property is calculated as the difference between the net disposal
proceeds and the carrying amount of the asset and is included in profit or loss in the period in which the property
is derecognized.
Intangible Assets
Intangible assets that have finite useful lives and are acquired separately are initially measured at cost and
subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization
is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method
are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for
prospectively. The residual value of an intangible asset with a finite useful life should be assumed to be zero
unless the Corporation expects to dispose of the intangible asset before the end of its economic life.
Oil and Gas Interests and Exploration Expenses
All geological and geophysical exploration costs are charged to current income.
The costs of drilling exploratory wells (“exploration well expenses”) in sites that have not yet proven to contain
reserves of commercial quantities (“unproven sites”) are initially charged to current income. Exploration well
expenses are subsequently capitalized as part of “oil and gas interests” accounts when (i) sites are proven to
contain mineral reserves of commercial quantities and (ii) the construction of the wellhead equipment or offshore
production platforms and flow lines is complete. The exploration expenses incurred in the current year are
reclassified from “exploration expenses” to assets. Costs already charged to income in prior years are recognized
as assets and as “nonoperating income.”
│
46
│
