1) Accounting policies
The 2014 financial statements have been prepared in accordance with French Generally Accepted Accounting Principles (“French GAAP”) in force.
Property, plant and equipment
Property, plant and equipment are carried at cost except those assets that were acquired before 1976 for which the basis has been revalued pursuant to French regulations. They are depreciated according to the straight-line method over their estimated useful life, as follows:
Investments and loans to consolidated subsidiaries and equity affiliates
Investments in consolidated subsidiaries and equity affiliates are accounted for at the acquisition cost, or the appraised value for investments affected by the 1976 legal revaluation.
Loans to consolidated subsidiaries and equity affiliates are stated at their nominal value.
In the Upstream segment, in the absence of a development decision, allowances are recorded against investments and loans for an amount corresponding to the exploration costs incurred. When the existence of proved reserves is established, the value of the investments and loans is limited to the subsidiary expected pay- back evaluated at year-end.
For other segments, allowances for impairment in value are calculated by reference to the Company’s equity in the underlying net assets, the fair value and usefulness of the investment.
Cost for crude oil and refined product inventories are determined according to the First-In, First-Out (FIFO) method. Inventories are valued at either the historical cost or the market value, whichever is lower.
Receivables and payables
Receivables and payables are stated at nominal value. Allowances for doubtful debts are recorded when the actual value is inferior to the book value.
Foreign currency transactions
Receivables and payables denominated in foreign currencies are translated into euros at the year-end exchange rate. Translation differences for non-hedged items are recorded under “Currency Translation adjustment” on the assets or liabilities side of the balance sheet. Unrealized exchange losses are recorded as provisions.
Translation differences related to other foreign receivables and payables are recorded in the statement of income and offset by unrealized gains or losses from off-balance sheet hedging.
TOTAL S.A. uses financial instruments for hedging purposes only in order to manage its exposure to changes in interest rates and foreign exchange rates.
As part of this policy, the Company may use interest rate swap agreements and forward transactions. The difference between interest to be paid and interest to be received on these swaps or premiums and discounts on these forward transactions is recognized as interest expense or interest income on a prorated basis, over the life of the instruments.