Annual Report 2009

Sivu: 96 Sivu: 94 Sivu: 95 Sivu: 93 Sivu: 92 Sivu: 91 Sivu: 89 Sivu: 90 Sivu: 87 Sivu: 88 Sivu: 86 Sivu: 85 Sivu: 84 Sivu: 83 Sivu: 82 Sivu: 81 Sivu: 80 Sivu: 79 Sivu: 78 Sivu: 77 Sivu: 76 Sivu: 75 Sivu: 73 Sivu: 74 Sivu: 72 Sivu: 71 Sivu: 70 Sivu: 69

Sivu: 68

ACCOUNTING PRINCIPLES have been determined based on value in use calculations. Assessments used in these calculations include judgement of the future cash flows, discount rates and exchange rates. For 2009, impairment charges were recorded for investments in associated companies based upon the value in use from those assets. Site restoration provision Amounts used in recording a provision for site restoration are estimates based on current legal and constructive requirements and current technology and price levels for the removal of facilities and plugging and abandoning of wells. Due to changes in relation to these items, the future actual cash outflows in relation to the site decommissioning and restoration can be different. To reflect the effects due to changes in legislation, requirements and technology and price levels, the carrying amounts of site restoration provisions are reviewed on a regular basis. The effects of changes in estimates do not give rise to prior year adjustments and are treated prospectively over the estimated remaining commercial reserves of each field. While the Group uses its best estimates and judgement, actual results could differ from these estimates. Estimates in impairment of goodwill Determination of whether goodwill has suffered any impairment requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The net present value calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. For 2009, impairment charges were recorded for goodwill based upon the value in use from the underlying assets. Events after the balance sheet date All events up to the date when the financial statements were authorised for issue and which have a material effect in the financial statements have been disclosed. Group arrangements that were not covered by that interpretation. The new guidance is not expected to have a material impact on the Group’s financial statements. IFRS 3 (Revised), “Business combinations” (effective from 1 July 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair vale or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The Group will apply IFRS 3 (Revised) prospectively to all business combinations from 1 January 2010. IFRS 5 (amendment), ‘Measurement of non-current assets (or disposal Groups) classified as held-for-sale’. The amendment provides clarification that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal Groups) classified as held for sale or discontinued operations. It also clarifies that the general requirement of IAS 1 still apply, particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1. The Group and Company will apply IFRS 5 (amendment) from 1 January 2010. It is not expected to have a material impact on the Group or Company’s financial statements. IAS 1 (amendment), ‘Presentation of financial statements’. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current. By amending the definition of current liability, the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time. The Group and Company will apply IAS 1 (amendment) from 1 January 2010. It is not expected to have a material impact on the Group or Company’s financial statements. IAS 27 (Revised), “Consolidated and separate financial statements” (effective from 1 July 2009). The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. The Group will apply IAS 27 (Revised) prospectively to transactions with non-controlling interests from 1 January 2010. IAS 38 (amendment), ‘Intangible Assets’. The Group and Company will apply IAS 38 (amendment) from the date IFRS 3 (revised) is adopted. The amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives. The amendment will not result in a material impact on the Group or Company’s financial statements. Coming IFRS accounting principles The following new standards, amendments and interpretations to existing standards both relating to approved and not yet approved developments by the EU and are not mandatory for the 2009 financial statements and have not been early adopted. They related to the Group’s accounting periods beginning on or after 1 January 2010 or later periods: IFRIC 17, ‘Distribution of non-cash assets to owners’ (effective on or after 1 July 2009). This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. IFRS 5 has also been amended to require that assets are classified as held for distribution only when they are available for distribution in their present condition and the distribution is highly probable. The Group and Company will apply IFRIC 17 from 1 January 2010. It is not expected to have a material impact on the Group or Company’s financial statements. IFRS 2 (amendments), ‘Group cash-settled and share-based payment transactions’. In addition to incorporating IFRIC 8, ‘Scope of IFRS 2’, and IFRIC 11, ‘IFRS 2 – Group and treasury share transactions’, the amendments expand on the guidance in IFRIC 11 to address the classification of 66 Lundin Petroleum ANNUAL REPORT 2009

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