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BP » Topics » Available-for-sale financial assets

This excerpt taken from the BP 20-F filed Mar 4, 2008.
Available-for-sale financial assets
Available-for-sale financial assets are those non-derivative financial assets that are not classified as loans and receivables. After initial recognition, available-for-sale financial assets are measured at fair value, with gains or losses recognized as a separate component of equity until the investment is derecognized or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement.
     The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. Where fair value cannot be reliably estimated, assets are carried at cost.

Financial assets at fair value through profit or loss
Derivatives, other than those designated as effective hedging instruments, are classified as held for trading and are included in this category. These assets are carried on the balance sheet at fair value with gains or losses recognized in the income statement.

Derivatives designated as hedging instruments in an effective hedge
Such derivatives are carried on the balance sheet at fair value, the treatment of gains and losses arising from revaluation are described below in the accounting policy for Derivative financial instruments and hedging activities.

Impairment of financial assets
The group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.

Loans and receivables
If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced, with the amount of the loss recognized in profit or loss.

Available-for-sale financial assets
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortization) and its fair value is transferred from equity to the income statement.

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This excerpt taken from the BP 6-K filed Mar 13, 2006.
Available-for-sale financial assets If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortization) and its fair value is transferred from equity to the income statement.

 

Reversals of impairment losses on debt instruments are taken through the income statement if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognized in profit or loss. Reversals in respect of equity instruments classified as available-for-sale are not recognized in the income statement.

 

This excerpt taken from the BP 6-K filed Sep 7, 2005.
Available-for-sale financial assets

 

Under UK GAAP, the Group’s investments other than subsidiaries, associates and jointly controlled entities are stated at cost less accumulated impairment losses.

 

For IFRS, these investments are classified as available-for-sale financial assets, and as such need to be recorded at fair value with the gain or loss arising as a result of the change in fair value being recorded directly in equity.

 

The transition adjustment relates to the fair value of listed investments held by the Group.  In accordance with IAS 39 all future fair value adjustments will be booked directly in equity until disposal of the investment, when the cumulative associated gains/losses are re-cycled through the income statement.  At this point the gain or loss on disposal under IFRS will be identical to that which would result using historical cost accounting.

 

85


 

Increase (decrease) in caption heading

 

 

 

At January 1,

 

 

 

2005

 

 

 

($ million)

 

Available-for-sale investments

 

344

 

Deferred tax liabilities

 

114

 

Total equity

 

230

 

 

EXCERPTS ON THIS PAGE:

20-F
Mar 4, 2008
6-K
Mar 13, 2006
6-K
Sep 7, 2005

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