b'STAATSOLIE MAATSCHAPPIJ SURINAME N.V.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020 (Continued)Thecarryingamountofdeferredtaxassetsis itscostisrecognizedinthecarryingamountreviewed at each reporting date and reducedoftheplantandequipmentasareplacementto the extent that it is no longer probable thatiftherecognitioncriteriaaresatisfied.Allothersufficienttaxableprofitwillbeavailabletoallow repairandmaintenancecostsarerecognizedinallorpartofthedeferredtaxassettobeutilized. theconsolidatedstatementofprofitorlossasUnrecognizeddeferredtaxassetsarereassessed incurred.Thepresentvalueoftheexpectedcostateachreportingdateandarerecognizedtothe forthedecommissioningoftheassetafteritsuse,extent that it has become probable that futureis included in the cost of the respective asset if the taxableprofitswillallowthedeferredtaxassetto recognition criteria for a provision are met. Refer to be recovered. Significantaccountingjudgments,estimatesandDeferred tax assets and liabilities are measured atassumptions(Section2.4)andProvisions(Sectionthe tax rates that are expected to apply in the year4.9)forfurtherinformationabouttherecognizedwhentheassetisrealizedortheliabilityissettled, decommissioning provision.based on tax rates (and tax laws) that have beenLandandbuildingsaremeasuredathistoricalenacted or substantively enacted at the reportingcost,lessaccumulateddepreciationonbuildings,date.Deferredtaxrelatingtoitemsrecognized andimpairmentlossesifany,arerecognizedattheoutsideprofitorlossisrecognizedoutsideprofitdate of revaluation.or loss. Exploration and evaluation assetsDeferredtaxassetsandliabilitiesareoffset,only if a legally enforceable right exists to set offExploration and evaluation activity involve current income tax assets against current incomethesearchforhydrocarbonresources,thetaxliabilities,andthedeferredtaxesrelatetothe determination of technical feasibility and the same taxation authority. assessmentofcommercialviabilityofanidentifiedresource.Sales taxOncethelegalrighttoexplorehasbeenacquired,Revenues,expensesandassetsarerecognized costs directly associated with an exploration well netoftheamountofsalestaxexcept: arecapitalizedasexplorationandevaluationWherethesalestaxincurredonapurchaseof projectsinprogressuntilthedrillingofthewellisassets or services is not recoverable from thecomplete and the results have been evaluated. taxationauthority,inwhichcase,thesalestax Thesecostsincludedirectlyattributableemployeeisrecognizedaspartofthecostofacquisition remuneration,materialsandfuelused,rigcostsandoftheassetoraspartoftheexpenseitem,as payments made to contractors.applicableGeologicalandgeophysicalcostsarerecognizedReceivables and or payables are stated with theintheconsolidatedstatementofprofitorloss,asamount of sales tax included incurred.Thenetamountofsalestaxrecoverablefrom,or If no potentially commercial hydrocarbons are payableto,thetaxationauthorityisincludedas discovered,theexplorationassetiswrittenoffpart of receivables or payables in the consolidatedthroughtheconsolidatedstatementofprofitorlossstatementoffinancialposition. as a dry hole.l. Property, plant and equipmentIfextractablehydrocarbonsarefoundand,subjectConstructioninprogress,plantandequipmentare to further appraisal activity (e.g. the drilling of statedatcost,netofaccumulateddepreciation additionalwells),itisprobablethattheycanbeand/oraccumulatedimpairmentlosses,ifany. commerciallydeveloped,thecostscontinuetoSuch cost includes the cost of replacing parts ofbecarriedasprojectsinprogresswhilesufficient/theproperty,plantandequipmentandborrowing continued progress is made in assessing the costsforlong-termconstructionprojectsifthe commerciality of the hydrocarbons.recognitioncriteriaaremet.Whensignificantparts Costs directly associated with appraisal activity ofproperty,plantandequipmentarerequiredto undertakentodeterminethesize,characteristicsandbereplacedatintervals,theGrouprecognizes commercial potential of a reservoir following the initial suchpartsasindividualassetswithspecific discoveryofhydrocarbons,includingthecostsofuseful lives and depreciates them accordingly.appraisalwellswherehydrocarbonswerenotfound,Likewise,whenamajorinspectionisperformed, areinitiallycapitalizedasprojectsinprogress.62 STAATSOLIE 2020 ANNUAL REPORT'