In the 2011 annual report Royal Dutch Shell reports that it prepares its financial statements “under the provisions of the Companies Act 2006 and Article 4 of the International Accounting Standards (IAS) Regulation.” The statements are prepared “in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.”
1. Footnote 1 goes on to state that there are no material differences from IFRS as issued by the IASB, and “therefore the Consolidated Financial Statements have been prepared in accordance with IFRS as issued by the IASB.” Speculate as to why this extra language would be appropriate or necessary in Shell’s financial statements.
2. Footnote 10 explains that although Shell has a 52% interest in Aera , an exploration and production company in the United States, it does not consolidate Aera. Speculate as to why accounting for Aera using the equity method might be appropriate under IFRS.