BP (BP)

Major maintenance expenditure

For purposes of US GAAP reporting, prior to January 1, 2005, the Group capitalized expenditures on maintenance, refits or repairs where it enhanced or restored the performance of an asset, or replaced an asset or part of an asset that was separately depreciated. This included other elements of expenditure incurred during major plant maintenance shutdowns, such as overhaul costs.

As of January 1, 2005, the Group changed its US GAAP accounting policy to expense all overhaul costs and similar major maintenance expenditure as incurred. The effect of this accounting change for US GAAP reporting is reflected as a cumulative effect of an accounting change for the year ended December 31, 2005. This adjustment is equal to the net book value of capitalised overhaul costs as of January 1, 2005 as reported under US GAAP. The effect of this restatement is to (i) reduce profit for the six months ended June 30 and the nine months ended September 30, 2005 previously reported by $794 million; and (ii) increase profits for the six months ended June 30, the nine months ended September 30 and the year ended December 31, 2004 previously reported by $88 million, $123 million and $217 million respectively.

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Major maintenance expenditure

For purposes of US GAAP reporting, prior to January 1, 2005, the Group capitalized expenditures on maintenance, refits or repairs where it enhanced or restored the performance of an asset, or replaced an asset or part of an asset that was separately depreciated. This included other elements of expenditure incurred during major plant maintenance shutdowns, such as overhaul costs.

As of January 1, 2005, the Group changed its US GAAP accounting policy to expense all overhaul costs and similar major maintenance expenditure as incurred. The effect of this accounting change for US GAAP reporting is reflected as a cumulative effect of an accounting change for the year ended December 31, 2005. This adjustment is equal to the net book value of capitalised overhaul costs as of January 1, 2005 as reported under US GAAP. The effect of this restatement is to (i) reduce profit, as adjusted to accord with US GAAP, for the three months ended March 31, 2005; six months ended June 30, 2005; and nine months ended September 30, 2005 previously reported by $794 million and (ii) increase profits, as adjusted to accord with US GAAP, previously reported for the three months ended March 31, 2004 by $32 million; for the three months ended June 30, 2004 by $56 million; for the six months ended June 30, 2004 by $88 million; for the three months ended September 30, 2004 by $35 million and for the nine months ended September 30, 2004 by $123 million.