BP 2005 Annual Report Download - page 127

50 First-time adoption of International Financial Reporting Standards continued
Other non-financial contracts at fair value Certain net-settled non-financial contracts are deemed to meet the definition of financial instruments
under IAS 39 and, as such, need to be recorded on the balance sheet at fair value.
Increase (decrease) in caption heading $ million
At 1 January
2005
Non-current assets – derivative financial instruments 110
Current assets – derivative financial instruments 34
Current liabilities – derivative financial instruments 14
Non-current liabilities – derivative financial instruments 12
Deferred tax liabilities 44
Total equity 74
Other non-financial contracts no longer at fair value Certain non-financial contracts held for trading purposes were marked to market under UK
GAAP. However, under IFRS they could no longer be recorded at fair value as they did not meet the definition of financial assets or financial
liabilities. These contracts are accounted for on an accruals basis.
Increase (decrease) in caption heading $ million
At 1 January
2005
Non-current assets – derivative financial instruments (34)
Current assets – derivative financial instruments 47
Deferred tax liabilities 5
Total equity 8
Available-for-sale financial assets Under UK GAAP, the group’s investments other than subsidiaries, jointly controlled entities and associates were
stated at cost less accumulated impairment losses.
For IFRS, these investments are classified as available-for-sale financial assets, and as such need to be recorded at fair value with the gain or
loss arising as a result of the change in fair value being recorded directly in equity.
The transition adjustment relates to the fair value of listed investments held by the group. In accordance with IAS 39, all future fair value
adjustments will be booked directly in equity until disposal of the investment, when the cumulative associated gains/losses are recycled through
the income statement. At this point, the gain or loss on disposal under IFRS will be identical to that which would result using historical cost
accounting.
Increase (decrease) in caption heading $ million
At 1 January
2005
Other investments 344
Deferred tax liabilities 114
Total equity 230
Embedded derivatives Embedded derivatives are required to be separated from their host contracts and separately recorded at fair value, with any
resulting change in gain or loss in the period being recognized in the income statement.
Certain contracts have been determined to contain embedded derivatives. These embedded derivatives will be fair valued at each period end
with the resulting gains or losses taken to the income statement.
Increase (decrease) in caption heading $ million
At 1 January
2005
Non-current assets – prepayments and accrued income 599
Current assets – prepayments and accrued income 278
Current liabilities – accruals and deferred income 402
Non-current liabilities – accruals and deferred income 1,151
Deferred tax liabilities (267)
Total equity (409)
BP Annual Report and Accounts 2005 125