Registration document 2007 - Total.com
Registration document 2007 - Total.com
Registration document 2007 - Total.com
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11<br />
Notes to statutory financial statements<br />
1) Accounting policies<br />
The 2006 financial statements have been prepared in accordance with French Generally Accepted Accounting Principles (“French GAAP”)<br />
Property, plant and equipment<br />
Tangible assets are carried at cost with the exception of assets that have been acquired before 1976 which cost has been revalued under<br />
French regulations. They are depreciated by the straight-line method over their estimated useful life, as follows:<br />
• Buildings 20-30 years<br />
• Furniture and fixtures 5-10 years<br />
• Transportation equipment 2-5 years<br />
• Office equipment and furniture 5-10 years<br />
• Computer equipment 3-5 years<br />
Investments and loans to subsidiaries and affiliated <strong>com</strong>panies<br />
Investments in subsidiaries and affiliated <strong>com</strong>panies are stated at the acquisition cost, or the appraised value for investments affected by<br />
the 1976 legal revaluation.<br />
Loans to subsidiaries and affiliated <strong>com</strong>panies are stated at their nominal value.<br />
In the upstream segment, when no production decision is reached, allowances are recorded against investments and loans for an amount<br />
corresponding to the exploration costs incurred. When the existence of proved reserves is established, the value of the investments and<br />
loans is limited to the subsidiary expected pay-back evaluated at year-end.<br />
For other subsidiaries, allowances for impairment in value are calculated by reference to the Company’s equity in the underlying net assets,<br />
the fair value and usefulness of the investment.<br />
Inventories<br />
Inventories are valued at either the historical cost or the market value, whichever is lower. Cost is determined on a first-in, first-out basis<br />
(FIFO) for crude oil and refined product inventories.<br />
Receivables and payables<br />
Receivables and payables are stated at nominal value. Allowances for doubtful debts are recorded when the actual value is inferior to the<br />
book value.<br />
Foreign currency transactions<br />
Receivables and payables denominated in foreign currencies are translated into euros at the year-end exchange rate. Translation<br />
differences upon non-hedged items are recorded under “Translation adjustment” on the assets or liabilities side of the balance sheet.<br />
Unrealized exchange losses are accrued for.<br />
Translation differences upon other foreign receivables and payables are recorded in the statement of in<strong>com</strong>e and <strong>com</strong>pensated by<br />
unrealized gains or losses from off-balance sheet hedging.<br />
Financial instruments<br />
The Company mainly uses financial instruments for hedging purposes, in order to manage its exposure to changes in interest rates and<br />
foreign exchange rates.<br />
The Company enters into interest rate and foreign currency swap agreements. The difference between interest to be paid and interest to<br />
be received or premiums and discounts on these swaps is recognized as interest expense or interest in<strong>com</strong>e on a prorated basis, over the<br />
life of the hedged item.<br />
The Company may also use futures, caps, floors, and options. Under hedge accounting, changes in the market value of such contracts<br />
are recognized as interest expense or interest in<strong>com</strong>e in the same period as the gains and losses on the item being hedged. For option<br />
contracts, premiums paid are amortized over the duration of the option.<br />
An accrual is recorded for any unrealized losses related to operations that do not <strong>com</strong>ply with the criteria required for hedge accounting.<br />
256<br />
Appendix 3 - TOTAL S.A.<br />
Parent <strong>com</strong>pany’s statutory financial statements<br />
TOTAL - <strong>Registration</strong> Document 2006