Page 98 - Suncor AR English

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(i) Goodwill and Other Intangible Assets

The company accounts for business combinations using the acquisition method. The excess of the purchase price over the
fair value of the identifiable net assets represents goodwill, and is allocated to the cash-generating units (CGUs) or groups

of CGUs expected to benefit from the business combination.

Other intangible assets include acquired customer lists and brand value.

Goodwill and brand value have indefinite useful lives and are not subject to amortization. Customer lists are amortized
over their expected useful lives, which range from five to ten years. Expected useful lives of goodwill and other intangible

assets are reviewed on an annual basis.

(j) Impairment of Assets

Non-Financial Assets
Property, Plant and Equipment and Exploration and Evaluation assets are reviewed quarterly to assess whether there is any

indication of impairment. Goodwill and intangible assets that have an indefinite useful life are tested for impairment
annually. Exploration and Evaluation assets are also tested for impairment immediately prior to being transferred to

Property, Plant and Equipment.

If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated as the higher of the fair
value less costs of disposal and value-in-use. In determining fair value less costs of disposal, recent market transactions are

taken into account, if available. In the absence of such transactions, an appropriate valuation model is used. Value-in-use
is assessed using the present value of the expected future cash flows of the relevant asset. If the asset does not generate

cash inflows that are largely independent of those from other assets or groups of assets, the asset is tested as part of a
CGU, which is the smallest identifiable group of assets that generates cash inflows that are largely independent of the

cash inflows from other assets or groups of assets. An impairment loss is the amount by which the carrying amount of
the individual asset or CGU exceeds its recoverable amount.

Impairments are reversed for all CGUs and individual assets, other than goodwill, if there has been a change in the

estimates and judgments used to determine the asset’s recoverable amount. If such indication exists, the carrying amount
of the CGU or asset is increased to its revised recoverable amount which cannot exceed the carrying amount that would
have been determined, net of depletion, depreciation and amortization, had no impairment been recognized.

Impairments and impairment reversals are recognized within Depreciation, Depletion, Amortization and Impairment.

Financial Assets
At each reporting date, the company assesses whether there is evidence that financial assets that are carried at amortized
cost are impaired. If a financial asset carried at amortized cost is impaired, the impairment is recognized in Operating,

Selling and General expense.

(k) Assets Held For Sale
Assets and liabilities are classified as held for sale if their carrying amounts are expected to be recovered through a

disposition rather than through continuing use. The assets or disposal groups are measured at the lower of their carrying
amount and fair value less costs of disposal. Impairment losses on initial classification as well as subsequent gains or

losses on remeasurement are recognized in Depreciation, Depletion, Amortization and Impairment. However, when the
assets or disposal groups are sold, the gains or losses on sale are recognized in (Gain) Loss on Disposal of Assets. Assets

classified as held for sale are not depreciated, depleted or amortized.

(l) Provisions
Provisions are recognized by the company when it has a legal or constructive obligation as a result of past events, it is

probable that an outflow of economic resources will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.

Provisions are recognized for decommissioning and restoration obligations associated with the company’s Exploration and

Evaluation assets and Property, Plant and Equipment. Provisions for decommissioning and restoration obligations are
measured at the present value of management’s best estimate of the future cash flows required to settle the present

obligation, using the credit-adjusted risk-free interest rate. The value of the obligation is added to the carrying amount of
the associated asset and amortized over the useful life of the asset. The provision is accreted over time through Financing

Expenses with actual expenditures charged against the accumulated obligation. Changes in the future cash flow estimates

94 SUNCOR ENERGY INC. ANNUAL REPORT 2013