Schlumberger 2011 Annual Report - page 57

Notes to Consolidated Financial Statements
1. Business Description
Schlumberger Limited (Schlumberger N.V., incorporated in Curaçao) and its consolidated subsidiaries (collectively,
“Schlumberger”) form the world’s leading supplier of technology, integrated project management and information
solutions to customers in the oil and gas industry worldwide, providing the industry’s widest range of oilfield services
from exploration to production.
2. Summary of Accounting Policies
Consolidated Financial Statements
of Schlumberger have been prepared in accordance with accounting
principles generally accepted in the United States of America.
Principles of Consolidation
The accompanying
Consolidated Financial Statements
include the accounts of Schlumberger, its wholly-owned
subsidiaries, and subsidiaries over which it exercises a controlling financial interest. All significant intercompany
transactions and balances have been eliminated. Investments in entities in which Schlumberger does not have a
controlling financial interest, but over which it has significant influence are accounted for using the equity method.
Schlumberger’s share of the after-tax earnings of equity method investees is included in
Interest and other income,
. Investments in which Schlumberger does not have the ability to exercise significant influence are accounted for
using the cost method. Both equity and cost method investments are classified in
Investments in Affiliated
Certain prior year items have been reclassified to conform to the current year presentation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. On an on-going basis, Schlumberger evaluates its estimates, including those related to
collectibility of accounts receivable; valuation of inventories and investments; recoverability of goodwill, intangible
assets and investments in affiliates; income taxes; multiclient seismic data; contingencies and actuarial assumptions
for employee benefit plans. Schlumberger bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
Schlumberger recognizes revenue based upon purchase orders, contracts or other persuasive evidence of an
arrangement with the customer that include fixed or determinable prices provided that collectibility is reasonably
assured. Revenue is recognized for services when they are rendered. Revenue is recognized for products upon delivery,
when the customer assumes the risks and rewards of ownership. Certain products may be provided on a consigned
basis in which case revenue is recognized when the products are consumed provided that all other revenue recognition
criteria have been met.
Revenue from seismic contract services performed on a dayrate basis is recognized as the service is performed.
Revenue from other services, including pre-funded multiclient surveys, is recognized as the seismic data is acquired
and/or processed on a proportionate basis as work is performed. This method requires revenue to be recognized based
upon quantifiable measures of progress, such as square kilometers acquired. Multiclient data surveys are licensed or
sold to customers on a non-transferable basis. Revenue from sales of completed multiclient data surveys is recognized
upon obtaining a signed licensing agreement and providing customers with access to such data.
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