REACH SUBSEA ASA

Depreciation of other assets is calculated using the straight-line method to allocate their cost or revalued amounts less their residual
values over their estimated useful lives, as follows:
Machinery 10-15 years
Vehicles 3-5 years
Furniture, fittings and equipment 3-8 years
The assets’ residual values and useful lives are reviewed, and the depreciation schedule adjusted, if appropriate, at the end of each
reporting period.
Impairment of non-financial assets
At each reporting date the Group assesses whether there is an indication that an asset may be impaired. If any such indication exists,
or where annual testing for impairment is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Where the carrying amount of an asset
exceeds its recoverable amount, the asset is considered 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 pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
If, in a subsequent period, the amount of the impairment loss decreases, and the decrease can be related objectively to an event
occurring after the impairment was recognized, the previously recognized impairment loss is reversed.
Onerous contracts
Provisions for onerous contracts are recognized when the Group has a contract under which the unavoidable costs of meeting the
obligations under the contract exceed the economic benefits expected to be received from the contract.
Leasing
Leases are classified as financial or operating based on a specific assessment of the individual agreement.
Operating lease
Leases where substantially all the risks and rewards of the asset is not transferred from the counterparty are classified as operating
leases. The rent is classified as an operating expense, and is recognized in the income statement on a straight-line basis over the
period of the contract.
Financial lease
Financial leases are capitalised in the financial statements as assets and liabilities at the lower of the fair value of the leased asset and
the present value of the minimum rent payments and any initial direct costs. The monthly lease is separated into an interest element
and a principal element.
The asset included in a financial lease is depreciated. The depreciation schedule is consistent with similar assets owned by the Group.
Financial instruments
Categories
The Group has financial instruments in the following categories
1) Financial instruments at fair value through profit or loss
This category includes financial instruments held for trading. These are instruments acquired for the purpose of selling or repurchase
in the near term, including derivatives that are not designated and effective hedging instruments.
Additionally financial instruments designated by the Group as at fair value through profit or loss upon initial recognition, are included in
this category. Financial instruments in this category are classified as current assets or liabilities.
2) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
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