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 $25 million and $27 million, net of hedging activities,
were recognized in 2011 and 2010, respectively. Transaction gains of $73 million, net of hedging activities, were
recognized during 2009.
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, 2011—$190 million; December 31, 2010—$189 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, 2011 and 2010.
For purposes of the
Consolidated Statement of Cash Flows
, Schlumberger does not consider short-term investments
to be cash equivalents.
Fixed Income Investments, held to maturity
at December 31, 2011 of $256 million mature as follows: $80 million in
2013, $166 million in 2014 and $10 million in 2015.
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 incurred in acquiring and processing the multiclient seismic data. Such costs are charged to
Cost of revenue –
Oilfield Services
based on the percentage of the total costs to the estimated total revenue that Schlumberger expects
to receive from the sales of such data. However, under no circumstance will an individual survey carry a net book value
greater than a 4-year, straight-line amortized value.
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