NOTES TO THE FINANCIAL STATEMENTS 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) (d) Right-of-use assets (i) Lease and non-lease components At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative standalone prices. However, for leases of properties in which the Group is a lessee, it has elected not to separate non-lease components and will instead account for the lease and non-lease component as a single lease component. (ii) Recognition exemption The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. It assesses the lease classification of a sublease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sublease as an operating lease. (e) Intangible assets (i) Development and production assets Development and production assets comprise rights and concessions and producing oil and gas properties are measured at cost. The cost of these intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, these intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of development and production assets is computed based on the unit of production method using proven and probable reserves. (ii) Software Software acquired by the Group is stated at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of software is recognised in profit or loss on a straight-line basis over the estimated useful lives from the date that it is available for use. The estimated useful lives is 3 to 6 years. (iii) Exploration and evaluation assets The costs of exploring for and evaluating oil and gas properties, including the costs of acquiring rights to explore, geological and geophysical studies, exploratory drilling and directly related overheads, are capitalised and classified as intangible exploration and evaluation assets. 149 OPERATIONAL REVIEW SUSTAINABILITY STATEMENT GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDERS’ INFORMATION INTELLIGENCE POWERING
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