Royal Dutch Shell PLC: Identifying differences and similarities between IFRS and GAAP
(LO 11-10)
Royal Dutch Shell had pre-tax income of $2,047 million, $28,314 million, and $33,592 million in
2015, 2014, and 2013, respectively. Presented below are excerpts from the 2015 annual report of
Royal Dutch Shell, a Dutch company that finds, extracts, processes, and sells oil and gas.
DEPRECIATION, DEPLETION AND AMORTISATION
Property, plant and equipment related to hydrocarbon production activities are depreciated on a unit-of-
production basis over the proved developed reserves of the field concerned. Assets whose useful lives differ
from the lifetime of the field are depreciated applying the straight-line method. Rights and concessions in
respect of proved properties are depleted on the unit-of-production basis over the total proved reserves of
the relevant area. Where individually insignificant, unproved properties may be grouped and depreciated
based on factors such as the average concession term and past experience of recognising proved reserves.
Property, plant and equipment held under finance leases and capitalised LNG off-take and sales
contracts are depreciated or amortised over the term of the respective contract. Other property, plant and
equipment and intangible assets are depreciated and amortised on a straight-line basis over their estimated
useful lives, except for goodwill, which is not amortised. They include major inspection costs, which are
depreciated over the estimated period before the next planned major inspection (three to five years), and the
following:
Asset Type
Property, plant and equipment
Refineries and chemical plants
Retail service stations
Upgraders
Intangible assets
Software
Trademarks
Useful Life
20 years
15 years
30 years
5 years
40 years
