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 $37 million, $25 million and $27 million, net of hedging
activities, were recognized in 2012, 2011 and 2010, respectively.
Short-term and Fixed Income 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, 2012 – $194 million; December 31, 2011 – $190 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, 2012 and 2011.
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, 2012 of $245 million mature as follows: $172 million in
2014, $51 million in 2015 and $5 million in 2016 and $17 million in 2017.
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.
Investments in Affiliated Companies
Investments in companies 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 privately held companies in which
Schlumberger does not have the ability to exercise significant influence are accounted for using the cost
method. Investments in publicly traded companies in which Schlumberger does not have significant influence are
accounted for as available-for-sale marketable securities. These marketable securities are reported at fair value, based
on quoted market prices, with unrealized gains and losses reported as a component of
Accumulated other
comprehensive loss
. The fair value and cost basis of these marketable securities was $222 million and $81 million,
respectively at December 31, 2012. Schlumberger did not have any investments in marketable securities at
December 31, 2011.
Equity and cost method investments as well as investments in publicly traded companies are classified as
Investments in Affiliated Companies
in the
Consolidated Balance Sheet
.
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
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