Staatsolie Annual Report 2017

Annual Report 2017 151
Staatsolie Maatschappij Suriname N.V.
Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016
(continued)
IFRS Inventories 15 will are not stated change at the the assessment lower of cost of and the net existence realizable of embedded value. Net derivatives. realizable value IFRS is 15 the states estimated that if
a selling contract price is partially in the ordinary within scope course of this of business, standard less and partially estimated in the costs scope of completion of another standard, the estimated an entity
will costs first to apply sell. the separation and measurement requirements of the other standard(s). Therefore, to the
extent The cost that of provisional crude oil pricing and refined features products are considered is the purchase embedded cost, derivatives the cost that of require refining, separation including from the
their appropriate host contract, proportion they of will depreciation, continue to be depletion outside and the scope amortization of IFRS and 15 and overheads entities will based be required on normal to
account operating for capacity, these in determined accordance on with a weighted IFRS 9. average Revenue basis. in respect of the host contract will be recognized
when control passes to the customer (which has been determined to be the same point in time, i.e., when
The net realizable value of crude oil and refined products is based on the estimated selling price in the
the crude oil is physically transferred into a vessel, pipe or other delivery mechanism) and will be
ordinary course of business, less the estimated costs of completion and the estimated costs necessary to
measured at the amount the entity expects to be entitled – being the estimate of the price expected to be
make the sale.
received, based on the most recently determined estimate of crude quality differential and the estimated
forward Materials price and (which supplies is are consistent valued with using current the weighted practice). average As noted cost above method. in the discussion on the potential
impact of IFRS 9, the embedded derivative will no longer be separated from the host contract. This is
because Pipeline fill the existence of the provisional pricing features will mean the receivable will fail to meet the
requirements Crude oil, which to be is measured necessary at to amortized bring a pipeline cost and into instead working the order, entire is receivable treated as will a be part measured of the related to fair
value pipeline. with This subsequent is on the basis movements that it is being not held recognized for sale in or the consumed statement in a of production profit or loss process, and but other is
comprehensive necessary to the income. operation of a facility during more than one operating cycle, and its cost cannot be
recouped through sale (or is significantly impaired). This applies even if the part of inventory that is
When it comes to the presentation of amounts arising from such provisionally priced contracts, IFRS 15
deemed to be an item of property, plant and equipment cannot be separated physically from the rest of
requires “revenue from contracts with customers” to be disclosed separately from other types of revenue.
inventory. It is valued at cost and is depreciated over the useful life of the related asset.
This means that revenue recognized from the initial sale must be separately disclosed in the consolidated
financial statements from any revenue/income recognized from subsequent movements in the fair value
n. Impairment of non-financial assets
of the related receivable.
The Group assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment testing for an asset is required, the Group estimates
(b) Other presentation and disclosure requirements
the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash
In addition to the presentation and disclosure requirements discussed above, IFRS 15 contains other
generating units (CGU) fair value less costs of disposal and its value in use. It is determined for an
presentation and disclosure requirements which are more detailed than current IFRS. The presentation
individual asset, unless the asset does not generate cash inflows that are largely independent of those
requirements represent a significant change from current practice and will increase the volume of
from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its
disclosures required in Staatsolie’s consolidated financial statements. Many of the disclosure
recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In
requirements in IFRS 15 are completely new. In 2017 Staatsolie started to consider the new systems,
assessing value in use, the estimated future cash flows are discounted to their present value using a pretax
discount rate that reflects current market assessments of the time value of money and the risks
internal controls, policies and procedures necessary to collect and disclose the required information.
specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken
into account. If no such transactions can be identified, an appropriate valuation model is used.
Impairment losses of continuing operations are recognized in the consolidated statement of profit or loss
in those expense categories consistent with the function of the impaired asset, except for 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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