EDC 2014 SR (UPDATED)

EDC 2014 Performance Report
Costs of drilling services were included in the computation of net income from discontinued
operations, in 2012.
General and Administrative Expenses
General and administrative expenses constitute cost of administering the business and normally
include the expenses incurred by the departments in the Head Office (i.e., Management and
Services, and Project Location’s Administrative Services Department). General and
administrative expenses are expensed when incurred.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, are added to the cost of the assets, until such time that the assets are substantially ready for
their intended use or sale, which necessarily take a substantial period of time. Income earned on
temporary investment of specific borrowings, pending the expenditure on qualifying assets, is
deducted from the borrowing costs eligible for capitalization. Borrowing costs include interest
charges and other costs incurred in connection with the borrowing of funds, as well as exchange
differences arising from foreign currency borrowings used to finance the project to the extent that
they are regarded as an adjustment to interest costs. All other borrowing costs are recognized in
the consolidated statement of income in the period in which they are incurred.
Taxes
Current Income Tax
Current income tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authority. The tax rates and tax laws
used to compute the amount are those that are enacted or substantively enacted as at the financial
reporting date.
Deferred Tax
Deferred tax is provided using the balance sheet liability method on temporary differences at the
financial reporting date between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary
differences, except:
where the deferred tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not reverse
in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carryforward benefits
of unused tax credits and unused tax losses [i.e., net operating loss carry-over (NOLCO)], to the
extent that it is probable that sufficient taxable profits will be available against which the
deductible temporary differences, and the carryforward benefits of unused tax credits and unused
tax losses can be utilized except:
where the deferred tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
and
179