Based on the description, summarise the depreciation model for the company in simple terms. Is it a
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Based on the description, summarise the depreciation model for the company in simple terms.
Is it a cost model or a revaluation model (give reasons)?
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11 Property, plant and equipment continued Depreciation Depreciation of assets, other than land, assets under construction and capitalised exploration and evaluation that are not depreciated, is calculated using either the straight-line (SL) method or units of production (UoP) method, net of residual values, over the estimated useful lives of specific assets. The depreciation method and rates applied to specific assets reflect the pattern in which the asset's benefits are expected to be used by the Group. The Group's reported reserves are used to determine UoP depreciation unless doing so results in depreciation charges that do not reflect the asset's useful life. Where this occurs, alternative approaches to determining reserves are applied, such as using management's expectations of future oil and gas prices rather than yearly average prices, to provide a phasing of periodic depreciation charges that better reflects the asset's expected useful life. Where assets are dedicated to a mine or petroleum lease, the below useful lives are subject to the lesser of the asset category's useful life and the life of the mine or petroleum lease, unless those assets are readily transferable to another productive mine or lease. Key estimates The determination of useful lives, residual values and depreciation methods involves estimates and assumptions and is reviewed annually. Any changes to useful lives or any other estimates or assumptions may affect prospective depreciation rates and asset carrying values. The table below summarises the principal depreciation methods and rates applied to major asset categories by the Group. Capitalised exploration, evaluation and development expenditure Category Buildings Mineral rights and petroleum interests UOP Plant and equipment SL 3-30 years Typical depreciation methodology SL UOP Depreciation rate 25-50 years Based on the rate of depletion of reserves Based on the rate of depletion of reserves Commitments The Group's commitments for capital expenditure were US$2,585 million as at 30 June 2020 (2019: US$3,308 million). The Group's commitments related to leases are included in note 20 'Leases'. 11 Property, plant and equipment continued Depreciation Depreciation of assets, other than land, assets under construction and capitalised exploration and evaluation that are not depreciated, is calculated using either the straight-line (SL) method or units of production (UoP) method, net of residual values, over the estimated useful lives of specific assets. The depreciation method and rates applied to specific assets reflect the pattern in which the asset's benefits are expected to be used by the Group. The Group's reported reserves are used to determine UoP depreciation unless doing so results in depreciation charges that do not reflect the asset's useful life. Where this occurs, alternative approaches to determining reserves are applied, such as using management's expectations of future oil and gas prices rather than yearly average prices, to provide a phasing of periodic depreciation charges that better reflects the asset's expected useful life. Where assets are dedicated to a mine or petroleum lease, the below useful lives are subject to the lesser of the asset category's useful life and the life of the mine or petroleum lease, unless those assets are readily transferable to another productive mine or lease. Key estimates The determination of useful lives, residual values and depreciation methods involves estimates and assumptions and is reviewed annually. Any changes to useful lives or any other estimates or assumptions may affect prospective depreciation rates and asset carrying values. The table below summarises the principal depreciation methods and rates applied to major asset categories by the Group. Capitalised exploration, evaluation and development expenditure Category Buildings Mineral rights and petroleum interests UOP Plant and equipment SL 3-30 years Typical depreciation methodology SL UOP Depreciation rate 25-50 years Based on the rate of depletion of reserves Based on the rate of depletion of reserves Commitments The Group's commitments for capital expenditure were US$2,585 million as at 30 June 2020 (2019: US$3,308 million). The Group's commitments related to leases are included in note 20 'Leases'.
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Answer The company use Straight line method for building plant and equipment and also company use unit of production method for Mineral rights and pet... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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