Need help clarifying RDS.A purchase line item on I/S
So the 20-f is prepared in accordance with IFRS.
http://s02.static-shell.com/content/dam/shell-new…
Why is there a "purchase" expense line item? I've gone cntl+f crazy on the thing, but I cannot find an explanation of that amount. I also looked up some IFRS guides on OG purchase accounting and most say exactly what you would think: if future economic benefits are determinable, then capitalize. That was from a PWC article.
I'm unconvinced though that RDS is spending $327MM (2014 20f) in borrowing costs related to anything that does not result in future economic benefits. Additionally, CFI has capex in the $30mm area, which I think makes sense.
What does that $327MM represent of "purchases"? Is this the captive costs related to their downstream operations? So downstream purchases refined crude from their own upstream component and it's akin to a cost of sales?
Any help would be great, thanks!
It should be outside purchases of crude for downstream ops. So when they can't supply all of their capacity with their own production they will purchase from others.
Thats my understanding of what that item is but I don't cover any of the European players and have a limited knowledge of IFRS so someone please correct me if Im wrong.
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