Staatsolie Annual Report 2017

Annual Report 2017 149
Staatsolie Maatschappij Suriname N.V.
Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016
(continued)
(a) Inventories Classification are stated and measurement
at the lower of cost and net realizable value. Net realizable value is the estimated
Overall, selling price Staatsolie in the ordinary expects course the adoption of business, of IFRS less 9 estimated may have costs an of effect completion on the and classification the estimated and
measurement costs to sell. of its financial assets, but no significant impact on the classification and measurement of
the financial liabilities or equity.
The cost of crude oil and refined products is the purchase cost, the cost of refining, including the
Staatsolie appropriate will proportion consider of whether depreciation, any of the depletion sales contracts and amortization contain an and embedded overheads derivative, based on but normal do not
meet operating the capacity, normal sales determined and purchases on a weighted exemption. average Under basis. IAS 39, where provisionally priced sales
contracts contain an embedded derivative that is considered to be closely related to the host contract, this
The net realizable value of crude oil and refined products is based on the estimated selling price in the
is not separated from the host contract until delivery into the contract for accounting purposes under IAS
ordinary course of business, less the estimated costs of completion and the estimated costs necessary to
39. Accordingly, the embedded derivative, which does not qualify for hedge accounting, is recognized at
make the sale.
fair value, with subsequent changes in fair value recognized in the statement of profit or loss and other
comprehensive Materials and supplies income are each valued period using until the final weighted settlement. average The initial cost method. estimate of fair value and subsequent
changes in fair value up until final settlement, are estimated by reference to forward market prices.
Pipeline fill
On adoption of IFRS 9, embedded derivatives will no longer be separated from the host receivable as
Crude oil, which is necessary to bring a pipeline into working order, is treated as a part of the related
these receivables are not expected to give rise to cash flows that represent solely payments of principal
pipeline. This is on the basis that it is not held for sale or consumed in a production process, but is
and interest. Instead, the receivables will be accounted for as one instrument and measured at fair value
necessary to the operation of a facility during more than one operating cycle, and its cost cannot be
through profit or loss with subsequent changes in fair value recognized in the statement of profit or loss
recouped through sale (or is significantly impaired). This applies even if the part of inventory that is
and other comprehensive income each period until final settlement. This will mean that the quantum of
deemed to be an item of property, plant and equipment cannot be separated physically from the rest of
the fair value movements may be different under IFRS 9, because the fair value of the receivable will
inventory. It is valued at cost and is depreciated over the useful life of the related asset.
factor in the impact of credit and interest rates.
Other non-provisionally n. Impairment priced of non-financial trade receivables assets are considered to be held to collect contractual cash
flows The Group and are assesses expected at each to give reporting rise to cash date whether flows representing there is an solely indication payments that an of asset principal may and be impaired. interest.
Staatsolie If any indication expects exists, that or these when will annual continue impairment to be measured testing for at an amortized asset is required, cost under the IFRS Group 9. estimates However,
Staatsolie the asset’s will recoverable analyze the amount. contractual An cash asset’s flow recoverable characteristics amount of these is the instruments higher of in an more asset’s detail or before cash
concluding generating whether units (CGU) all these fair instruments value less costs meet of the disposal criteria for and amortized its value cost in use. measurement It is determined under IFRS for an 9.
For individual other asset, financial unless assets the currently asset does measured not generate fair cash value, inflows e.g., derivative that are largely financial independent assets, Staatsolie of those
expects from other to continue assets or measuring groups of these assets. at fair Where value. the carrying amount of an asset or CGU exceeds its
There recoverable will be amount, no impact the on asset financial is considered liabilities. impaired and is written down to its recoverable amount. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pretax
Impairment discount rate that reflects current market assessments of the time value of money and the risks
(b)
IFRS specific 9 requires to the asset. to now In use determining an expected fair value credit less loss costs model of for disposal, its trade recent receivables market measured transactions at amortized are taken
cost, into account. either on If no a such 12-month transactions or lifetime can basis. be identified, Staatsolie an appropriate expects to valuation apply the model simplified is used. approach and
record Impairment lifetime losses expected of continuing losses on operations all trade receivables are recognized measured in the consolidated amortized cost. statement Given of the profit short-term
loss
nature in those of expense these receivables, categories Staatsolie consistent does with not the expect function these of changes the impaired will have asset, a significant except for impact. a property
previously revalued where the revaluation was taken to OCI. In this case, the impairment is also
recognized in OCI up to the amount of any previous revaluation.
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