Chevron 2012 Annual Report Download - page 43

Chevron Corporation 2012 Annual Report 41
Contingent rentals are based on factors other than the pas-
sage of time, principally sales volumes at leased service stations.
Certain leases include escalation clauses for adjusting rentals to
reect changes in price indices, renewal options ranging up to
25 years, and options to purchase the leased property during or
at the end of the initial or renewal lease period for the fair mar-
ket value or other specied amount at that time.
At December 31, 2012, the estimated future minimum
lease payments (net of noncancelable sublease rentals) under
operating and capital leases, which at inception had a non-
cancelable term of more than one year, were as follows:
At December 31
Operating Capital
Leases Leases
Year: 2013 $ 727 $ 45
2014 657 37
2015 618 23
2016 528 13
2017 401 12
ereafter 617 59
Total $ 3,548 $ 189
Less: Amounts representing interest
and executory costs $ (40)
Net present values 149
Less: Capital lease obligations
included in short-term debt (50)
Long-term capital lease obligations $ 99
Note 8
Fair Value Measurements
Accounting standards for fair value measurement (ASC 820)
establish a framework for measuring fair value and stipulate
disclosures about fair value measurements. e standards
apply to recurring and nonrecurring fair value measurements
of nancial and nonnancial assets and liabilities. Among
the required disclosures is the fair value hierarchy of inputs
the company uses to value an asset or a liability. e three
levels of the fair value hierarchy are described as follows:
Level 1: Quoted prices (unadjusted) in active markets
for identical assets and liabilities. For the company,
Level 1 inputs include exchange-traded futures con-
tracts for which the parties are willing to transact at the
exchange-quoted price and marketable securities that
are actively traded.
Level 2: Inputs other than Level 1 that are observable,
either directly or indirectly. For the company, Level 2
inputs include quoted prices for similar assets or liabili-
ties, prices obtained through third-party broker quotes
and prices that can be corroborated with other observ-
able inputs for substantially the complete term of a
contract.
Note 6
Summarized Financial Data — Tengizchevroil LLP
Chevron has a 50 percent equity ownership interest in
Tengizchevroil LLP (TCO). Refer to Note 11, on page 46,
foradiscussion of TCO operations.
Summarized nancial information for 100 percent of
TCO is presented in the following table:
Year ended December 31
2012 2011 2010
Sales and other operating revenues $ 23,089 $ 25,278 $ 17,812
Costs and other deductions 10,064 10,941 8,394
Net income attributable to TCO 9,119 10,039 6,593
At December 31
2012 2011
Current assets $ 3,251 $ 3,477
Other assets 12,020 11,619
Current liabilities 2,597 2,995
Other liabilities 3,390 3,759
Total TCO net equity $ 9,284 $ 8,342
Note 7
Lease Commitments
Certain noncancelable leases are classied as capital leases,
and the leased assets are included as part of “Properties,
plant and equipment, at cost” on the Consolidated Balance
Sheet. Such leasing arrangements involve crude oil produc-
tion and processing equipment, service stations, bareboat
charters, oce buildings, and other facilities. Other leases
are classied as operating leases and are not capitalized.
e payments on operating leases are recorded as expense.
Details of the capitalized leased assets are as follows:
At December 31
2012 2011
Upstream $ 433 $ 585
Downstream 316 316
All Other – –
Total 749 901
Less: Accumulated amortization 479 568
Net capitalized leased assets $ 270 $ 333
Rental expenses incurred for operating leases during
2012, 2011 and 2010 were as follows:
Year ended December 31
2012 2011 2010
Minimum rentals $ 973 $ 892 $ 931
Contingent rentals 7 11 10
Total 980 903 941
Less: Sublease rental income 32 39 41
Net rental expense $ 948 $ 864 $ 900