CORRAL PETROLEUM HOLDINGS AB (PUBL) - Preem

The cost value of finished goods and work in progress consists of raw material, direct wages, other directexpenses and attributable indirect manufacturing expenses (based on normal manufacturing capacity). The net realizablevalue is the estimated sales price in operating activities.With regard to crude oil, the replacement cost is used as the best available measure of the net realizable value. Incases where the net realizable value is below the cost value of crude oil and there is thus a need for impairment, theimpairment charge is reduced in cases where the products’ net realizable value exceeds the cost value. The reduction inthe impairment amount for the crude oil consists of the difference between the products’ net realizable value and the costvalue.Borrowed inventory is not included in the value of inventories, and in the same way inventory out on loan isincluded in the value of inventories, as significant risks and benefits have not been transferred.Current and deferred taxThe current tax expense is calculated on the basis of the tax rules adopted or adopted in practice in the countrieswhere the Parent Company’s subsidiaries and associates operate and generate taxable income. Management conductsregular assessments of claims lodged in tax returns in respect of situations in which applicable tax rules are subject tointerpretation and makes, if it is considered suitable, provisions for amounts that will probably have to be paid to the taxauthority. Taxes are recorded in the consolidated comprehensive income statements, except when underlying transactionsare recorded directly in equity, in which case the associated tax effect is recorded in equity. Current tax is tax that mustbe paid or received in respect of the current year. This also includes any adjustment of current tax attributable to previousperiods.Deferred tax is recorded in full, using the balance sheet method, for all temporary differences that arise betweenthe tax base of assets and liabilities and their carrying amounts in the consolidated financial statements. The deferred taxis not, however, recorded if it arises as a consequence of a transaction that constitutes the first recording of an asset orliability that is not a business combination and that, at the time of the transaction, has no effect on either the recordedprofit (loss) or the profit (loss) for tax purposes. Deferred income tax is calculated applying tax rates (and laws) that havebeen adopted or announced as of the balance sheet date and that are expected to be in force when the relevant deferredtax asset is realized or the deferred tax liability is settled. Deferred tax assets are recorded to the extent that it is probablethat future tax surpluses will be available against which the temporary differences can be utilized. The value of deferredtax assets is reduced when it is no longer considered likely that they can be utilized.ProvisionsProvisions for environmental restoration measures and legal requirements are recorded when the Group has alegal or an informal obligation as a consequence of earlier events, and it is likely that an outflow of resources will berequired to settle the commitment and the amount can be calculated in a reliable way. The Group has made provisions forenvironmental restoration measures relating to the non-operational depots and approved close-down of gas stations.Provisions are valued at the current value of the amount that is expected to be required to settle the obligation. Inthis context a discount rate before tax is used that reflects a current market assessment of the time-based value of moneyand the risks that are associated with the provision.Contingent liabilitiesA contingent liability is recorded when there is a possible commitment that originates from events that haveoccurred and the existence of which is only confirmed by one or more uncertain future events or when there is acommitment that is not recorded as a liability or a provision because it is not likely that an outflow of resources will berequired or that the outflow cannot be calculated.A future close-down of operations within the Group may involve a requirement for decontamination andrestoration works. It is believed, however, that such an event will take place well into the future, and the future expensescannot be reliably calculated, so this cannot therefore be considered to be a contingent liability.Employee benefitsPension commitmentsThe Group has defined benefit and defined contribution pension plans. A defined contribution pension plan is apension plan under which the Group pays fixed contributions to a separate legal entity. The Group has no legal orinformal obligations to pay extra contributions if this legal entity does not have sufficient assets to pay all employeebenefits that are associated with the employees’ service during the current or previous periods. A defined benefit pensionplan is a pension plan that is not a defined contribution plan. Defined benefit plans are characterized by the fact that theyspecify an amount of the pension benefit that an employee receives after retirement based on length of service and salaryat retirement. The pension plans are usually financed by payments to insurance companies or funds managed byadministrators in accordance with periodic actuarial calculations. The pension commitments have been secured by meansF-12