Tolling Agreement Ifrs 16

O-G companies often enter into joint enterprise agreements (JOAs) in which two or more parties (operators and non-operators) jointly seek and develop oil and gas properties, leveraging the experience and resources of each party. These agreements often require the use of rental equipment. Questions arise about the leasing requirements under the new standard for JOAs parties. While we assume that the JOAs analysis will be very strongly based on facts and circumstances, the high-level example and analysis below should be useful, given that companies are considering these agreements: given the requirement to take stock of most leases, many O-G companies will reflect additional liabilities in their balance sheets after accepting the ASU. These companies should determine whether the increased leverage has a negative effect on important indicators or may lead to debt pact violations. This may depend in part on how different debt agreements define and limit debt, as well as whether or not “frozen GAAP” agreements are used in debt agreements. The ASU requires companies to make lease commitments outside of traditional debt, which may make some businesses easier. Despite this, we believe that it will be essential for all O-G companies to determine the potential impact of the ASU on debt pacts and to start discussions with lenders at an early stage if they believe that the infringements will likely be the result of the adoption of the ASU. In addition, the ASU requires information that may not contain existing leases, which may lead to the need for O-G companies to collect additional leasing documents to ensure the completeness of the data. For example, O-G companies generally have to go beyond the lease agreement to (1) record the fair value of the asset, (2) the estimated utility life of the asset, (3) the discount rate (for example.

B the incremental reference rate) and (4) certain decisions regarding leasing options. This will be a particular challenge for the multinationalS, whose lease documents can be drawn up in a foreign language and which may also vary due to local business practices. The chemical industry is capital-intensive and traditionally uses off-balance sheet leasing contracts for assets. This means that there will be specific challenges to this sector, such as toll contracts and toll contracts such as storage tanks, pipelines, transport nodes and others. O-G entities can have many leases on several decentralized sites and, in many cases, rental data is managed in tables or physical documents. As a result, data collection and abstraction can take time and resources and be a longer business for higher leasing companies. In addition, companies may have certain pieces of leasing data in electronic form; However, this data may not have been subject to internal control procedures under the Sarbanes-Oxley Act of 2002, may be in different systems and are likely incomplete if the entity takes into account the accounting and reporting obligations of the new standard. A company may find that a centralized repository of information is essential for the development of a complete inventory of leases. With respect to the client`s right to control the use of the identified asset, the definition of a lease under the new standard is a significant change from the current guidelines. Under the current U.S. GAAP, the acquisition of all results of an asset identified by an entity was considered an indication of the customer`s right to control the use of that asset when the unit prices of the agreement were neither fixed nor merchant at the time of delivery.