BP » Topics » Risk management

This excerpt taken from the BP 20-F filed Jun 13, 2006.

Risk management

        Gains and losses on derivatives used for risk management purposes are deferred and recognized in earnings or as adjustments to carrying amounts, as appropriate, when the underlying debt matures or the hedged transaction occurs. When an anticipated transaction is no longer likely to occur or finance debt is terminated before maturity, any deferred gain or loss that has arisen on the related derivative is recognized in the income statement, together with any gain or loss on the terminated item. Where such derivatives used for hedging purposes are terminated before the underlying debt matures or the hedged transaction occurs, the resulting gain or loss is recognized on a basis which matches the timing and accounting treatment of the underlying hedged item. The unrecognized and carried-forward gains and losses on derivatives used for hedging, and the movements therein, are shown in the following table.

 
  Not recognized
in the accounts

  Carried forward in the
balance sheet

 
  Gains

  Losses

  Total

  Gains

  Losses

  Total

 
  ($ million)

Gains and losses at January 1, 2004   331   (130 ) 201   1,003   (425 ) 578
  of which accounted for in income in 2004   98   (28 ) 70   438   (75 ) 363
Gains and losses at December 31, 2004   487   (408 ) 79   1,063   (364 ) 699
  of which expected to be recognized in income in 2005   259   (267 ) (8 ) 265   (77 ) 188

Gains and losses at January 1, 2003

 

526

 

(450

)

76

 

352

 

(28

)

324
  of which accounted for in income in 2003   96   (51 ) 45   200   (14 ) 186
Gains and losses at December 31, 2003   331   (130 ) 201   1,003   (425 ) 578
  of which expected to be recognized in income in 2004   98   (28 ) 70   438   (75 ) 363
This excerpt taken from the BP 20-F filed Jun 30, 2005.

Risk management

        Gains and losses on derivatives used for risk management purposes are deferred and recognized in earnings or as adjustments to carrying amounts, as appropriate, when the underlying debt matures or the hedged transaction occurs. When an anticipated transaction is no longer likely to occur or finance debt is terminated before maturity, any deferred gain or loss that has arisen on the related derivative is recognized in the income statement, together with any gain or loss on the terminated item. Where such derivatives used for hedging purposes are terminated before the underlying debt matures or the hedged transaction occurs, the resulting gain or loss is recognized on a basis which matches the timing and accounting treatment of the underlying hedged item. The unrecognized and carried-forward gains and losses on derivatives used for hedging, and the movements therein, are shown in the following table.

 
  Not recognized
in the accounts

  Carried forward in the
balance sheet

 
  Gains

  Losses

  Total

  Gains

  Losses

  Total

 
  ($ million)

Gains and losses at January 1, 2004   331   (130 ) 201   1,003   (425 ) 578
  of which accounted for in income in 2004   98   (28 ) 70   438   (75 ) 363
Gains and losses at December 31, 2004   487   (408 ) 79   1,063   (364 ) 699
  of which expected to be recognized in income in 2005   259   (267 ) (8 ) 265   (77 ) 188

Gains and losses at January 1, 2003

 

526

 

(450

)

76

 

352

 

(28

)

324
  of which accounted for in income in 2003   96   (51 ) 45   200   (14 ) 186
Gains and losses at December 31, 2003   331   (130 ) 201   1,003   (425 ) 578
  of which expected to be recognized in income in 2004   98   (28 ) 70   438   (75 ) 363

EXCERPTS ON THIS PAGE:

20-F
Jun 13, 2006
20-F
Jun 30, 2005
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