Registration Document 2005 - Total.com

3
Management Report of the Board of Directors
Summary of results and financial position
Equity-method affiliates’ IFRS restatement
This restatement primarily relates to the implementation of IFRS in
the equity-method affiliates’ financial statements, Sanofi-Aventis
and Cepsa. Within the financial statements prepared in compliance
with IFRS by Sanofi-Aventis, in-progress R&D costs of Aventis have
been capitalized as of the date of the merger. According to French
GAAP, the R&D costs were directly charged to expense.
Component-based approach
Pursuant to IAS 16 concerning tangible assets, the Group applies
the component-based approach. The cost of major turnarounds
of refineries and large petrochemical units are capitalized when
incurred and depreciated over the period of time between two
major turnarounds.
Impairment of assets
IAS 36 provides for the testing of assets for impairment purposes
by comparison of the assets’ carrying values with the associated
discounted future cash flows, contrary to the US standard FAS 144
previously applied by the Group which provides that the calculation
be based on undiscounted cash flows. As of the transition date,
this difference in methodology resulted in the impairment of certain
fixed assets mainly in the Upstream segment.
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Financial instruments (excluding treasury shares)
Publicly-traded equity securities are classified as “available for sale”
and are therefore valued at fair value. Changes in fair value of these
securities are recorded directly to shareholders’ equity. Derivatives
are now recorded in the balance sheet whereas under French
GAAP they were treated as off-balance sheet commitments.
Deferred taxes
In application of IAS 12 “Income taxes”, the Group records deferred
income taxes on temporary differences resulting from the difference
between the carrying value of its equity-method investments and
the taxable basis of these investments. The deferred tax calculation
is based on the expected future tax effect (dividend distribution rate
or tax rate on the gain or loss upon sale of these investments).
Mineral rights
According to IFRS 6 “Exploration for and Evaluation of Mineral
Resources”, the Group accounts for mineral rights under “Intangible
assets”.