Occidental Petroleum 2001 Annual Report Download - page 51

OTHER ASSETS
Other assets include tangible and intangible assets, certain of which are
amortized over the estimated periods to be benefited.
GOODWILL
Goodwill, which is included in the Other Assets account, has been amortized
over periods ranging from 5 to 40 years.
NOTES PAYABLE
Notes payable at December 31, 2001 and 2000 consisted of short-term notes
due to financial institutions and other corporations. The weighted average
interest rate on short-term borrowings outstanding as of December 31, 2001 and
2000 was 2.9 percent and 17.4 percent, respectively.
ACCRUED LIABILITIES--CURRENT
Accrued liabilities include the following (in millions):
Balance at December 31, 2001 2000
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Accrued payroll, commissions and related expenses $ 143 $ 180
Accrued environmental reserves $ 96 $ 79
Derivative financial instruments $ 102 $ 250
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ENVIRONMENTAL COSTS
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Reserves for estimated costs that relate to
existing conditions caused by past operations and that do not contribute to
current or future revenue generation are recorded when environmental remedial
efforts are probable and the costs can be reasonably estimated. In determining
the reserves, Occidental uses the most current information available, including
similar past experiences, available technology, regulations in effect, the
timing of remediation and cost-sharing arrangements. The environmental reserves
are based on management's estimate of the most likely cost to be incurred and
are reviewed periodically and adjusted as additional or new information becomes
available. Probable recoveries or reimbursements are recorded as an asset. The
environmental reserves are included in accrued liabilities and other noncurrent
liabilities and amounted to $96 million and $358 million, respectively, at
December 31, 2001 and $79 million and $323 million, respectively, at December
31, 2000.
Environmental reserves are discounted only when the aggregate amount of the
estimated costs for a specific site and the timing of cash payments are reliably
determinable. As of December 31, 2001 and 2000, reserves that were recorded on a
discounted basis were not material.
DISMANTLEMENT, RESTORATION AND RECLAMATION COSTS
The estimated future abandonment costs of oil and gas properties and
removal costs for offshore production platforms, net of salvage value, are
accrued over their operating lives. Such costs are calculated at
unit-of-production rates based upon estimated proved recoverable reserves and
are taken into account in determining depreciation, depletion and amortization.
For onshore production, Occidental assumes that the salvage value of the oil and
gas property will equal the dismantlement restoration and reclamation costs so
no accrual is necessary. For the chemical segment, appropriate reserves are
provided when a decision is made to dispose of a property, since Occidental
makes capital renewal expenditures on a continual basis while an asset is in
operation. Reserves for dismantlement, restoration and reclamation costs are
included in accrued liabilities and in other noncurrent liabilities and amounted
to $1 million and $21 million, respectively, at December 31, 2001, and $2
million and $28 million, respectively, at December 31, 2000.
DERIVATIVE INSTRUMENTS
Occidental's market-risk exposures relate primarily to commodity prices,
and, to a lesser extent, interest rates and foreign currency exchange rates.
Occidental may periodically use different types of derivative instruments to