EDC PR 2016 (FS section)

maturity or expected disposal date of those assets (or, if they have no maturity, the expected period
until the settlement of the related obligations). If the fair value of the plan assets is higher than the
present value of the defined benefit obligation, the measurement of the resulting defined benefit
asset is limited to the present value of economic benefits available in the form of refunds from the
plan or reductions in future contributions to the plan.
The Company’s right to be reimbursed of some or all of the expenditure required to settle a
defined benefit obligation is recognized as a separate asset at fair value when and only when
reimbursement is virtually certain.
Termination Benefits
Termination benefits are employee benefits provided in exchange for the termination of an
employee’s employment as a result of either an entity’s decision to terminate an employee’s
employment before the normal retirement date or an employee’s decision to accept an offer of
benefits in exchange for the termination of employment.
A liability and expense for a termination benefit is recognized at the earlier of when the entity can
no longer withdraw the offer of those benefits and when the entity recognizes related restructuring
costs. Initial recognition and subsequent changes to termination benefits are measured in
accordance with the nature of the employee benefit, as either post-employment benefits,
short-term employee benefits, or other long-term employee benefits.
Provisions
Provision for Rehabilitation and Restoration Costs
The Company recorded the present value of estimated costs of legal and constructive obligation
required to restore the sites upon termination of the cooperation period in accordance with its
GRESCs and WESC. The nature of these activities includes plugging of drilled wells and
restoration of pads and road networks. When the liability is initially recognized, the present value
of the estimated costs is capitalized as part of the carrying amount of the related “FCRS and
production wells” and “Power Plants” under property, plant and equipment, and exploration and
evaluation assets.
The amount of provision for rehabilitation and restoration costs in the consolidated statement of
financial position is increased by the accretion expense recognized in the profit or loss using the
effective interest method. The periodic unwinding of the discount is recognized in consolidated
statement of income as “Interest expense”.
For closed sites or areas, changes to estimated costs are recognized immediately in profit or loss.
Decrease in rehabilitation and restoration costs that exceeds the carrying amount of the
corresponding rehabilitation asset is recognized immediately in profit or loss.
The estimated future costs of rehabilitation and restoration are reviewed annually and adjusted as
appropriate. Changes in the estimated future costs or in the discount rate applied are added to or
deducted from the cost of the related asset.
Other Provisions
Provisions are recognized when (i) the Parent Company has a present obligation (legal or
constructive) as a result of a past event; (ii) it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation; and (iii) a reliable estimate can be made
of the amount of the obligation. Where the Company expects some or all of a provision to be
reimbursed, for example, under an insurance contract, the reimbursement is recognized as a
separate asset but only when the reimbursement is virtually certain. The expense relating to any
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I Energy Development Corporation Performance Report 2016