Bookkeeping

The inventory valuation effect is the difference between the results under the FIFO and the replacement cost methods. This press release presents the results for the third quarter of 2023 and first nine month of 2023 from the consolidated financial statements of TotalEnergies SE as of September 30, 2023 (unaudited). The notes to the consolidated financial statements (unaudited) are available on the website totalenergies.com. Cash flow from operations excluding working capital (CFFO) was $1,618 million in the third quarter 2023, up 22% quarter-to-quarter for the same reasons. Cash flow from operating activities is $1,936 million in the third quarter 2023, due to the positive impact on working capital of the seasonality in the gas and power marketing business. Cash flow from operations excluding working capital (CFFO) was $5,165 million in the third quarter 2023, up 18% quarter-to-quarter, for the same reasons.

If company A is willing to pay a premium above company B’s net asset value at the time of acquisition, then (post acquisition) company A’s balance sheet will show a non-current asset called goodwill (which is equal to the amount of that premium). Under most accounting frameworks, including both US GAAP and IFRS, Investments are generally held at purchase price (known as book value) on a company’s balance sheet. Conversely, if an entity plans to settle a liability within a year of the reporting date (before the contractual due date), but retains the right to defer the settlement, the liability is classified as non-current. The recent amendments to IAS 1 further clarified this approach (IAS 1.75A, BC48C(b)). Furthermore, these amendments eliminated the reference to the ‘unconditional’ right to defer settlement, reflecting the reality that various conditions often apply to loans (e.g., compliance with covenants).

Most balance sheets present individual items in distinction to current and non-current (except for banks and similar institutions). In 2020 and 2022, the IASB published amendments to IAS 1 to clarify the rules for classifying liabilities as current or non-current. Noncurrent Assets are written off throughout the course of their useful lives in order to spread out their expense. Noncurrent Assets are only depreciated to spread out the cost of the asset over time rather than to represent a new value or a replacement value. The combined total assets are at the very bottom and were $169.45 billion by the end of the fiscal year 2021. ManagerPlus provides a comprehensive and easy to use EAM for streamlining your asset management.

Current Assets

The highest point for each value chain for 2023 will be evaluated considering realizations over the full year, TotalEnergies gradually providing quarterly estimates. TotalEnergies expects hydrocarbon production to range between 2.4 and 2.5 Mboe/d in the fourth quarter 2023, which reflects the impact of the sale of its oil sands assets in Canada. Given the evolution of oil and gas prices in recent months and the lag effect on price formulas, TotalEnergies anticipates that its average LNG selling price should be above $10/Mbtu in the fourth quarter 2023. Despite entering the winter period with high natural gas inventories in Europe, in a tense market, gas prices remain very reactive to production disruptions. Net power production was 8.9 TWh in the third quarter 2023, up 7% quarter-to-quarter, due to growing power generation from renewables following the integration at 100% of Total Eren and the start-up of Myrtle Solar and Danish Fields in the US.

• Business assets can range from inventory and cash to state-of-the-art equipment, buildings, and intellectual property.
• Most balance sheets present individual items in distinction to current and non-current (except for banks and similar institutions).
• Typical examples of non-current items are long-term loans or provisions, property, plant and equipment, intangibles, investments in subsidiaries, etc.
• For instance, identifying the balance between current and non-current assets and liabilities is vital for effective liquidity management.

Accordingly, the adjusted results of the Refining & Chemicals and Marketing & Services segments are presented according to the replacement cost method. This method is used to assess the segments’ performance and facilitate the comparability of the segments’ performance with those of its main competitors. Organic investments is a non-GAAP financial measure and its most directly comparable IFRS measure is Cash flow used in investing activities. Organic investments refers to Net Investments, excluding acquisitions, asset sales and other operations with non-controlling interests. Organic Investments can be a valuable tool for decision makers, analysts and shareholders alike because it illustrates cash flow used by the Company to grow its asset base, excluding sources of external growth. Net acquisitions is a non-GAAP financial measure and its most directly comparable IFRS measure is Cash flow used in investing activities.

These non-current assets generate revenue or benefits for the business into future fiscal periods, but they do not have any physical substance (like PP&E would, for example). The bottom line is that the distinction between current and noncurrent assets is a distinction of timing. Knowing how many assets a company has and when those assets will be used or consumed gives the most accurate view of a company’s finances in the present, as well as a picture of the company’s financial future. Many people look at total assets, the value of both current and noncurrent assets and total liabilities to determine solvency. This approach allows you to see into the long-term and determine your ability to meet your future obligations.

What are Non-Current Assets?

Debt arrangements often contain creditor protective clauses, such as quantitative debt covenant clauses, material adverse change clauses1, subjective acceleration clauses2, or change in control clauses. The treatment of these features in classifying debt as current/noncurrent on the balance sheet can result in significant differences between IFRS Standards and US GAAP, affecting a company’s working capital and liquidity profile. This section is important for investors because it shows the company’s short-term liquidity. According to Apple’s balance sheet, it had $135 million in the Current Assets account it could convert to cash within one year. This short-term liquidity is vital—if Apple were to experience issues paying its short-term obligations, it could liquidate these assets to help cover these debts. Inventories are a typical current asset, as inventory production usually determines the length of company’s operating cycle.

Types of Non-Current Assets

For example, car-rental company routinely rents out its cars to various clients for a short period of time and then these cars are sold after 1 or 2 years. Here, I’m not talking about any finance lease – I mean short-term, or even long-term operating lease. This seems so basic and obvious that most of us do not really think about classifying individual assets and liabilities as current and non-current. Another important current asset is stocks; each firm must keep a certain amount of inventory to operate, but both excessive and low inventory holding costs are undesirable.

As payments toward bills and loans become due, management must have the necessary cash. The dollar value represented by the total current assets figure reflects the company’s cash and liquidity position. It allows management to reallocate and liquidate assets—if necessary—to continue business operations. Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.

Having sufficient current assets also allows a company to take advantage of short-term investment opportunities or make quick decisions to adapt to changing market conditions. IAS 13 governs the classification of assets and liabilities as current or noncurrent. Property, plants, buildings, facilities, equipment, and other illiquid investments are all examples of non-current assets because they can take a significant amount of time to sell. Non-current assets are also valued at their purchase price because they are held for longer times and depreciate.

The same applies for liabilities, too, but the standard IAS 1 adds that when there is no unconditional right to defer settlement of the liability for at least 12 months after the reporting period, then it is current. Trade payables are a type of current asset that means the amount of money owed to the firm by borrowers to whom it has sold products on credit. If goodwill is believed to be less valuable than it was at the time of the acquisition, it will be written down to its current fair value. Goodwill impairment is a non-cash expense and is often added back to normalized earnings and/or EBITDA when analyzing a company. Assets typically classified as non-current cannot be reclassified as current unless they fulfil the criteria for being classified as held for sale in accordance with IFRS 5.

Asset Management

TotalEnergies, in its trading activities, enters into storage contracts, whose future effects are recorded at fair value in TotalEnergies’ internal economic performance. In the fourth quarter 2023, TotalEnergies anticipates cash proceeds of around $4.1 billion(18) from the Canadian assets divestments, which could bring back the gearing below 8%. Return on average capital employed(1) how to calculate estimated taxes was 20.1% for the twelve months ended September 30, 2023. Differences continue to exist between IAS 1 and ASC 470, due to the different treatments of debt classification under both standards. Preparers with significant debt, or debt with complex terms, should assess the effect of the 2020 amendments, as well as monitor the IASB Board’s proposals for any further changes.

Impact of events after the end of the reporting period

Financial assets and liabilities of a long-term nature are divided into current/non-current portions based on the maturity of cash flows (IAS 1.68, 72). This disclosure is intended to facilitate the evaluation of an entity’s liquidity and solvency. Here, they consist of Emirates-related receivables as well as cash and financial equivalents, accounts receivable, inventory, and receivables.

Noncurrent Assets

Intangible resources include long-term holdings such as debt securities or estate development and financial assets in other companies. When accounting information is constructed based on availability, “current assets” consist of liquid assets and cash or similar assets that can be instantaneously used up, which is the first budget item on the resource side of the company’s balance sheet. Commercial papers, which are as liquid as cash, are commonly used as cash equivalents. Accurate financial records give a clear view of your company’s current financial status and help you make better decisions and avoid financial surprises. The balance sheet, income statement, and cash flow statements are the three components of your company’s financial statement and a formal record of your financial activities. Tracking your assets and liabilities lets you see what you have on hand versus what you owe.

If an asset will be converted to cash within a year, it’s usually funded with short term or revolving liabilities; if an asset is not expected to be converted to cash within a year, it’s typically financed using a longer term funding source. An entity’s operating cycle is the time interval between the acquisition of assets for processing and their conversion into cash. If the entity’s normal operating cycle is not clearly identifiable, it is presumed to be twelve months (IAS 1.68). All assets used/sold, or liabilities settled, within an operating cycle are classified as current, even if this exceeds 12 months.