Staatsolie Annual Report 2017

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Confidence in Our Own Abilities 54 Staatsolie Maatschappij Suriname N.V. Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) Available-for-sale (AFS) financial investments Transactions in foreign currencies are initially recorded by the Group entities at their respective AFS financial functional investments currency include rate ruling equity at and the debt date securities. of the transaction. Equity investments Monetary classified assets and as availablefor-sale denominated are those neither in foreign classified currencies as held-for-trading are re-translated nor designated the functional at fair value currency through rate profit exchange or loss. liabilities After initial ruling measurement, at the reporting AFS date. financial investments are subsequently measured at fair value with unrealized gains or losses recognized as OCI until the investment is derecognized, at which time, the Non-monetary assets and liabilities are translated using exchange rates that existed when the cumulative gain or loss is recognized in other operating income or expense, or the investment is values were determined. Exchange differences on settlement or translation of monetary items are determined to be impaired, at which time, the cumulative loss is reclassified to the consolidated statement recognized in the consolidated statement of profit or loss. of profit or loss in finance costs and removed from the OCI. The Group evaluates its AFS financial assets to determine (ii) Foreign whether subsidiaries the ability and intention to sell them in the near term is still appropriate. As at the reporting date, the assets and liabilities of these subsidiaries are translated into the (ii) Financial presentation liabilities currency of the Group at the rate of exchange ruling at the reporting date and, their statements of profit or loss are translated at the weighted average exchange rates for the year. Recognition and measurement Non-monetary items that are measured at historical cost in foreign currency are translated using Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or the exchange rates as at the date of the initial transaction. The exchange differences arising on loss, loans and borrowings, payables, as appropriate. All financial liabilities are recognized initially at fair the translation are taken directly to other comprehensive income. On disposal of a foreign entity, value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. the deferred cumulative amount recognized in equity relating to that particular foreign entity is The Group’s financial liabilities include trade and other payables, loans and borrowings including bank recognized in the consolidated statement of profit or loss. overdrafts. g. Taxes Loans and borrowings Current income tax assets and liabilities for the current period are measured at the amount expected to This is the category most relevant to the Group. After initial recognition, interest bearing loans and be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are amount are those that are enacted, or substantively enacted at the reporting date in the countries where recognized in the consolidated statement of profit or loss when the liabilities are derecognized as well as the Group operates and generates taxable income. Current income tax relating to items recognized through the EIR amortization process. Amortized cost is calculated by taking into account any discount or directly in equity is recognized in equity and not in the statement of profit or loss. Management premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax included in finance costs in the consolidated statement of profit or loss. This category generally applies to regulations are subject to interpretation, and establishes provisions where appropriate. interest-bearing loans and borrowings. Deferred tax Deferred m. tax Inventories is provided using the liability method on temporary differences between the tax bases of Petroleum assets and products liabilities are and valued their carrying at the lower amounts of cost for and financial net realizable reporting value. purposes at the reporting date. Raw Deferred materials: tax liabilities are recognized for all taxable temporary differences subject to certain specific • exceptions. Purchase cost is valued on weighted average method Deferred tax assets are recognized for all deductible temporary differences and carry-forward of unused Finished goods and work in progress: tax losses, to the extent that it is probable that future taxable profit will be available against which the • Cost of direct materials and labor and a proportion of manufacturing overheads based on normal temporary differences and carry forward of unused tax losses can be utilized. operating capacity but excluding borrowing costs Page 62 Page 54
Annual Report 2017 55 Staatsolie Maatschappij Suriname N.V. Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 Notes (continued) to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent selling price in the ordinary course of business, less estimated costs of completion and the estimated that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred costs to sell. tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized The cost of to crude the extent oil and that refined it has become products probable is the purchase that future cost, taxable the profits cost will of refining, allow the including deferred the tax asset appropriate to be recovered. proportion of depreciation, depletion and amortization and overheads based on normal operating capacity, determined on a weighted average basis. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when The net the realizable asset is value realized of crude or the oil liability and refined is settled, products based is on based tax rates on the (and estimated tax laws) selling that price have in been the enacted ordinary or course substantively of business, enacted less the at the estimated reporting costs date. of Deferred completion tax and relating the estimated to items recognized costs necessary outside to profit make or the loss sale. is recognized outside profit or loss. Deferred Materials tax and assets supplies and are liabilities valued using are offset, the weighted only if average a legally cost enforceable method. right exists to set off current income tax assets against current income tax liabilities, and the deferred taxes relate to the same taxation authority Pipeline fill Crude oil, which is necessary to bring a pipeline into working order, is treated as a part of the related Sales pipeline. tax This is on the basis that it is not held for sale or consumed in a production process, but is Revenues, necessary to expenses the operation and assets of a are facility recognized during more net of than the amount one operating of sales cycle, tax except: and its cost cannot be recouped • Where through the sales (or tax is incurred significantly on a impaired). purchase This of assets applies or services even if the is not part recoverable of inventory from that the is deemed taxation to be an authority, item of property, in which plant case, and the sales equipment tax is cannot recognized be separated as part of physically the cost of from acquisition the rest of inventory. the It asset is valued or as at part cost of and the is expense depreciated item, over as applicable the useful life of the related asset. • Receivables and or payables are stated with the amount of sales tax included The net n. amount Impairment of sales of tax non-financial recoverable from, assets or payable to, the taxation authority is included as part of receivables The Group assesses or payables at each in the reporting consolidated statement whether there of financial is indication position. that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates h. Property, plant and equipment the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash Construction generating units in progress, (CGU) fair plant value and less equipment costs of are disposal stated at and cost, its net value of accumulated in use. It is depreciation determined and/or for an accumulated impairment losses, if any. Such cost includes the cost of replacing parts of the property, individual asset, unless the asset does not generate cash inflows that are largely independent of those plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its met. When significant parts of property, plant and equipment are required to be replaced at intervals, the recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In Group recognizes such parts as individual assets with specific useful lives and depreciates them 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 accordingly. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken maintenance costs are recognized in the consolidated statement of profit or loss as incurred. The present into account. If no such transactions can be identified, an appropriate valuation model is used. value of the expected cost for the decommissioning of the asset after its use, is included in the cost of the Impairment losses of continuing operations are recognized in the consolidated statement of profit or loss respective asset if the recognition criteria for a provision are met. Refer to Significant accounting in those expense categories consistent with the function of the impaired asset, except for a property judgments, estimates and assumptions (Note 2.5) and Provisions (Note 4.7) for further information about previously revalued where the revaluation was taken to OCI. In this case, the impairment is also the recognized decommissioning provision. recognized in OCI up to the amount of any previous revaluation. Page 63 Page 55
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