BP 2006 Annual Report Download - page 192

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53 US GAAP reconciliation continued
The adjustments to profit for the year and to BP shareholders’ equity to accord with US GAAP are summarized below.
Increase (decrease) in caption heading $ million
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2006 2005 2004
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Production and manufacturing expenses 54(28)
Distribution and administration expenses 99(58)
Taxation (106) (19) 62
Profit for the year 92 624
$ million
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2006 2005
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Deferred tax liabilities 254 334
BP shareholders’ equity (254) (334)
(o) Discontinued operations
Under IFRS, a component of an entity held for sale as part of a single plan to dispose of a separate major line of business is classified as a discontinued
operation in the income statement.
Under US GAAP (EITF Issue No. 03-13 ‘Applying the Conditions in Paragraph 42 of FASB Statement No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, in Determining Whether to Report Discontinued Operations’), a disposed component of an enterprise is classified as a
discontinued operation only where the ongoing entity has no significant continuing direct cash flows and does not retain an interest, contract or other
arrangement sufficient to enable the entity to exert significant influence over the disposed component’s operating and financial policies after disposal.
In connection with the sale of Innovene the group has a number of commercial arrangements with Innovene for the supply of refining and
petrochemical feedstocks, and the purchase and sale of refined products.
Because of continuing direct cash flows that will result from activities with Innovene subsequent to divestment, under US GAAP the operations of
Innovene would not be classified as a discontinued operation but would be included in the group’s continuing operations. Under IFRS, the operations of
Innovene are classified as discontinued operations.
The following summarizes the income statement reclassifications that would be made if the operations of Innovene were shown in continuing
operations.
$ million
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2006
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As reported Reclassification As adjusted
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Sales and other operating revenues 265,906 – 265,906
Profit before interest and taxation from continuing operations 35,658 (184) 35,474
Finance costs 718 – 718
Other finance (income) expense (202) – (202)
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Profit before taxation from continuing operations 35,142 (184) 34,958
Taxation 12,516 (159) 12,357
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Profit from continuing operations 22,626 (25) 22,601
Loss from Innovene operations (25) 25 –
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Profit for the year 22,601 – 22,601
$ million
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2005
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As reported Reclassification As adjusted
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Sales and other operating revenues 239,792 12,376 252,168
Profit before interest and taxation from continuing operations 32,182 141 32,323
Finance costs 616 – 616
Other finance (income) expense 145 (3) 142
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Profit before taxation from continuing operations 31,421 144 31,565
Taxation 9,288 (40) 9,248
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Profit from continuing operations 22,133 184 22,317
Profit from Innovene operations 184 (184) –
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Profit for the year 22,317 – 22,317