5 - TPAO

the Accounting Standards (including those
which adapt the IAS/IFRS application). In line
with this decision, the Standard on “Financial
Reporting in Hyperinflationary Economies”
(“IAS/TMS 29”) released by the IASB was not
applied as of January 1, 2005.
1.3 Comparison of the Previous Period
Financial Statements
Comparison information was classified
for the purposes of conformation with the
presentation of the current period financial
statements if necessary.
1.4 Basis of Consolidation
Consolidated financial statements comprising
TPAO (“Company”, “Parent Company”) and
the partnership controlled by TPAO, have
been prepared by considering the financial
statements belonging to the year ending on
31, December 2011. The subsidiaries are
defined as the companies controlled by the
Parent Company holding more than 50%
of the shares and voting rights directly or
indirectly within the scope of capital and
managerial relations or having the right of
electing the majority of the management or
having the majority of the management over
the subsidiaries. The power of control implies
that Parent Company plays the efficient role
over the decisions of the company (Subsidiary)
regarding the financial and operational politics
and the power of managing aforementioned
politics for the purpose of benefiting from the
operations of the pre-mentioned company.
The companies those do not have supervision
capability but whose 10%-50% of the shares
controlled by the parent company are defined
as Partnership.
The subsidiaries and affiliated companies
and their shareholding percentages at 31
December 2011 are on the left page.
The company’s shareholding percentage
in KTM is shown in the financial statements
by using equity method. The equity and net
income attributable to minority shareholders’
interests are shown separately in the balance
sheet and income statement, respectively.
The losses applicable to the minority are
charged against the minority interest, so
as not to exceed the minority interest in the
equity of subsidiary. As the investment in KTM
is classified as an associated company, it is
accounted for on equity basis. Participating
interest acquired in KTM is accounted for
by the equity method. The equity method is
a method of accounting whereby an equity
investment is initially recorded at cost and
subsequently adjusted to reflect the investor’s
share of the net profit or loss of the associate
(investee). Distributions received from the
investee reduce the carrying amount of the
investment. The recoverable amount of an
investment in an associate is assessed and
if there is an indication that the carrying
amount of the associate may be impaired
permanently adjustment is made to state it at
its recoverable amount. The book value of
the investment in the capital of subsidiaries
held by the parent company has been off-set
against the equity of the invested companies
and all inter-company purchase and sales and
all accounts receivable and payable balances
have been eliminated.
1.5 Changes in Accounting Policies
If the changes in accounting estimates are
about only one term, they are applied in the
current period when the change was made, if
they are about future terms, they are applied
both in the period the changes were made
and in the future periods, prospectively.
There have been no significant changes in
the accounting estimates of the Group in the
current period.
Summary of Significant Accounting
Policies
2.1 Revenue
The group’s income consists of crude oil and
natural gas sales and the revenues of various
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