CORRAL PETROLEUM HOLDINGS AB (PUBL) - Preem

The refinery installations consist of a number of components with different useful lives. The main breakdown isinto plant and equipment. There are, however, several components that have different useful lives within this mainbreakdown. The following main component groups have been identified and form the basis of depreciation of refineryinstallations.Electrical Installations and Instruments ..........................................................................................................Heat exchangers..............................................................................................................................................Steam boiler....................................................................................................................................................Steel installation..............................................................................................................................................Pressure vessel................................................................................................................................................15 years15 years20 years30 years30 yearsThe residual values and useful lives of the assets are reviewed on each balance sheet date and adjusted asrequired.An asset’s carrying amount is impaired immediately to its recoverable amount if the asset’s carrying amountexceeds its estimated recoverable amount. This is tested in the event of an indication of such a need.The carrying amount of plant, property and equipment is removed from the balance sheet in connection withretirement or disposal, or when no future financial benefits are expected from the use or the retirement/disposal of theasset. Profits and losses in connection with disposal are defined by means of a comparison between sales income and thecarrying amount, and are recorded net in the consolidated comprehensive income statements depending on the function towhich the asset belongs.Borrowing costs that are not directly attributable to the purchasing, design or production of an asset and thattakes a significant length of time to produce for its intended use or sale are included in the cost value of the asset.Intangible assetsGoodwillGoodwill constitutes the amount by which the cost value exceeds the fair value of the Group’s share of theacquired subsidiary’s/associate’s identifiable net assets on the acquisition date. Goodwill in acquisitions of subsidiaries isrecorded as intangible assets. Goodwill that is recorded separately is tested on an annual basis to identify any possibleimpairment need and is recorded at the cost value minus accumulated impairment charges. Impairment charges ofgoodwill are not reversed. A profit or loss from the disposal of an entity includes the residual carrying amount of thegoodwill that relates to the disposed entity.Goodwill is divided among cash generating units in connection with the testing of a possible need for animpairment charge. This division is performed to the cash generating units or groups of cash generating units that areexpected to benefit from the business combination that gave rise to the goodwill item. The Group divides goodwillamong segments. The Group’s carrying amount of goodwill of SEK 308 million (308) is allocated in full to the Supply &Refining business area.Other intangible assetsThe Group has no other intangible assets that can be capitalized, which means that expenses for internallygenerated goodwill and trademarks, for example, are recognized as expenses as they arise.Impairment of non-financial assetsAssets that have an indeterminate useful life, such as goodwill, are not amortized, but are tested annually withregard to any possible impairment. Assets that are amortized are assessed with regard to the loss of value wheneverevents or changes in circumstances indicate that the carrying amount may perhaps not be recoverable. Impairment takesplace at the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairments are charged to theprofit (loss) for the year. The recoverable amount is the higher of the asset’s fair value minus selling expenses and itsvalue in use. When assessing an impairment need, assets are grouped at the lowest levels where there are separateidentifiable cash flows (cash generating units). For assets other than financial assets and goodwill that have previouslybeen impaired, every balance sheet day a test is performed to determine whether there should be a reversal. The carryingamount after reversal of impairments may not exceed the carrying amount that should have been recorded if noimpairment had been undertaken.InventoriesInventories are recorded at the lower of the cost value and the net realizable value. The cost value is determinedusing the first in, first out method (FIFO). The cost value for petroleum products, which are expressed in USD, isrecorded at the exchange rate prevailing on the date of the bill of lading.F-11