BP Annual Report and Form 20-F 2011 - Company Reporting

Parent company financial statements of BP p.l.c.1. Accounting policies continuedDeferred taxationDeferred tax is recognized in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or eventshave occurred at that date that will result in an obligation to pay more, or a right to pay less, tax in the future.Deferred tax assets are recognized only to the extent that it is considered more likely than not that there will be suitable taxable profits from whichthe underlying timing differences can be deducted.Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse,based on tax rates and laws enacted or substantively enacted at the balance sheet date.Use of estimatesThe preparation of accounts in conformity with generally accepted accounting practice requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities at the date of the accounts and the reported amounts of revenues and expenses during the reportingperiod. Actual outcomes could differ from these estimates.2. Taxation$ millionTax (credit) charge included in the statement of total recognized gains and losses 2011 2010Deferred taxOrigination and reversal of timing differences in the current year (583) 123This comprises:Actuarial (loss) gain relating to pensions and other post-retirement benefits (583) 123Deferred taxPensions – 480Other taxable timing differences – 70Net deferred tax liability (asset) – 410Analysis of movements during the yearAt 1 January 410 149Exchange adjustments 34 45Charge (credit) for the year on ordinary activities 139 93Charge (credit) for the year in the statement of total recognized gains and losses (583) 123At 31 December – 410At 31 December 2011, deferred tax assets of $559 million on pensions (2010 nil) and $91 million on other timing differences (2010 nil) were not recognizedas it is not considered more likely than not that suitable taxable profits will be available in the company from which the future reversal of the underlyingtiming differences can be deducted. It is anticipated that the reversal of these timing differences will benefit other group companies in the future.3. Fixed assets – investments$ millionSubsidiaryundertakingsAssociatedundertakingsShares Shares Loans TotalCostAt 1 January 2011 122,723 2 2 122,727Additions 3,719 – – 3,719Disposals (8) – – (8)At 31 December 2011 126,434 2 2 126,438Amounts providedAt 1 January 2011 74 – 2 76At 31 December 2011 74 – 2 76CostAt 1 January 2010 93,137 2 2 93,141Additions 29,637 – – 29,637Disposals (51) – – (51)At 31 December 2010 122,723 2 2 122,727Amounts providedAt 1 January 2010 74 – 2 76At 31 December 2010 74 – 2 76Net book amountAt 31 December 2011 126,360 2 – 126,362At 31 December 2010 122,649 2 – 122,651Financial statementsThe parent company financial statements of BP p.l.c. on pages PC1 – PC14 do not form part of BP’s Annual Report on Form 20-F as filed with the SEC.BP Annual Report and Form 20-F 2011 PC5