Revenue is occasionally generated from contractual arrangements that include multiple deliverables. Revenue from
these arrangements is recognized as each item is delivered based on their relative fair value and when the delivered
items have stand-alone value to the customer.
Revenue derived from the sale of licenses of Schlumberger software may include installation, maintenance,
consulting and training services. If services are not essential to the functionality of the software, the revenue for
each element of the contract is recognized separately based on its respective vendor specific objective evidence of fair
value when all of the following conditions are met: a signed contract is obtained, delivery has occurred, the fee is fixed or
determinable and collectibility is probable.
Translation of Non-United States Currencies
The functional currency of Schlumberger is primarily the US dollar. Assets and liabilities recorded in functional
currencies other than US dollars are translated at period end exchange rates. The resulting adjustments are charged or
credited directly to the
Equity
section of the
Consolidated Balance Sheet
. Revenue and expenses are translated at the
weighted-average exchange rates for the period. Realized and unrealized transaction gains and losses are included in
income in the period in which they occur. Transaction losses of $27 million net of hedging activities, were recognized in
2010. In 2009 and 2008, transaction gains net of hedging activities of $73 million and $8 million, respectively, were
recognized.
Investments
The
Consolidated Balance Sheet
reflects the Schlumberger investment portfolio separated between current and long
term, based on maturity. Both
Short-term investments
and
Fixed Income Investments, held to maturity
are comprised
primarily of money market funds, eurodollar time deposits, certificates of deposit, commercial paper, euro notes and
Eurobonds, and are substantially denominated in US dollars. Under normal circumstances it is the intent of
Schlumberger to hold the investments until maturity, with the exception of investments that are considered trading
(December 31, 2010 – $189 million; December 31, 2009 – $184 million). Short-term investments that are designated as
trading are stated at fair value, which is estimated using quoted market prices for those or similar investments. All other
investments are stated at cost plus accrued interest, which approximates market. The unrealized gains/losses on
investments designated as trading were not significant at both December 31, 2010 and 2009.
For purposes of the
Consolidated Statement of Cash Flows
, Schlumberger does not consider short-term investments
to be cash equivalents as a significant portion have original maturities in excess of three months.
Fixed Income Investments, held to maturity
at December 31, 2010 of $484 million mature as follows: $289 million in
2012, $80 million in 2013 and $115 million in 2014.
Inventories
Inventories
are stated at average cost or at market, whichever is lower. Costs included in
Inventories
consist of
materials, direct labor and manufacturing overhead.
Fixed Assets and Depreciation
Fixed assets are stated at cost less accumulated depreciation, which is provided for by charges to income over the
estimated useful lives of the assets using the straight-line method. Fixed assets include the manufacturing cost of oilfield
technical equipment manufactured or assembled by subsidiaries of Schlumberger. Expenditures for replacements and
improvements are capitalized. Maintenance and repairs are charged to operating expenses as incurred. Upon sale or
other disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the balance
sheet and the net amount, less proceeds from disposal, is charged or credited to income.
Multiclient Seismic Data
The multiclient library consists of completed and in-process seismic surveys that are licensed on a nonexclusive basis.
Multiclient surveys are primarily generated utilizing Schlumberger resources. Schlumberger capitalizes costs directly
42
Part II, Item 8
