BP 2005 Annual Report Download - page 121
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50 First-time adoption of International Financial Reporting Standards continued
Certain subsidiaries, principally in the US, have inventories valued on the last-in first-out (LIFO) basis for tax purposes. The difference between the
book and tax valuation is not a timing difference for UK GAAP but is a temporary difference for IFRS.
Increase (decrease) in caption heading $ million
Years ended
31 December
2004 2003
Taxation 438 165
Profit for the year (438) (165)
$ million
At 31 December 1 January
2004 2003 2003
Deferred tax liabilities 1,340 894 729
Total equity (1,340) (894) (729)
Under UK GAAP, a deferred tax provision is made for tax that would arise on the remittance of the retained earnings of overseas subsidiaries, joint
ventures and associated undertakings, only to the extent that dividends have been accrued as receivable. For IFRS, deferred tax is recognized for all
retained earnings whose distribution is not within the control of the group or whose distribution is likely in the foreseeable future, irrespective of
whether dividends have actually been accrued or declared.
Increase (decrease) in caption heading $ million
Years ended
31 December
2004 2003
Taxation 29 –
Profit for the year (29) –
$ million
At 31 December 1 January
2004 2003 2003
Deferred tax liabilities 214 186 186
Total equity (214) (186) (186)
Major maintenance expenditure Under UK GAAP, the group capitalized expenditure on major 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. Under IFRS, the group will
continue to capitalize expenditure where it enhances the performance of an asset or replaces an asset or part of an asset that meets the group’s
definition of a part of an asset in accordance with IAS 16 ‘Property, Plant and Equipment’. Other elements of expenditure incurred during major
plant maintenance shutdowns, such as overhaul costs, are not permitted to be capitalized under IFRS. There is therefore a reduction in the carrying
value of property, plant and equipment to reflect this change for expensing overhaul costs that no longer qualify for capitalization.
Increase (decrease) in caption heading $ million
Years ended
31 December
2004 2003
Production and manufacturing expenses 586 417
Depreciation, depletion and amortization (296) (216)
Taxation (73) (81)
Profit for the year (217) (120)
$ million
At 31 December 1 January
2004 2003 2003
Property, plant and equipment (1,148) (818) (577)
Deferred tax liabilities (354) (273) (183)
Total equity (794) (545) (394)
BP Annual Report and Accounts 2005 119