Question

In preparing financial statements in accordance with IFRS, there are certain accounting policies that may require a judgment or estimation in their application. Give examples of Aramco estimates and assumptions reported in consolidated financial statements.

Answer 1

Some of the more important projections and presumptions utilised by Saudi Aramco in their consolidated financial statements include the following:
1)
"the projected timing and amount of future capital expenditures, the projected future cash flows from operations, and the projected future demand for oil and gas on the market Oil and gas reserves' anticipated future output; anticipated future cash flows from operations."
2)
"The anticipated discount rate that will be applied to determine the future cash flows' current value."
These estimates and assumptions are utilised in the compilation of Saudi Aramco's consolidated financial statements and might materially affect the results reported.
3)
"Because it affects the timing and size of future capital expenditures, future cash flows from operations, and future market demand for oil and gas, the expected future production of oil and gas reserves is a significant component in determining the results that are reported. In other words, a significant portion of the stated results are based on the estimated amount of oil and gas reserves.
4)
An estimate of the time and amount of future capital expenditures is another crucial factor that may have an impact on the results that were reported. This is owing to the fact that future cash flows from operations will be impacted by the timing and size of capital expenditures.
5)
"The company's projection of its future cash flows from operations is one of the most crucial factors taken into account when putting up Saudi Aramco's consolidated financial statements. This is because future capital expenses, dividends, and share repurchases may all be funded by the cash flows from operations”
6)
"The company's prediction for the demand for oil and gas in the future is one of the most crucial factors taken into account when putting up Saudi Aramco's consolidated financial statements. Future market demand for oil and gas will have an impact on the timing and size of future capital investments, future cash flows from operations, and expected future production of oil and gas reserves. This is because the market demand for oil and gas in the future will have an impact on these variables."
7)
"One of the most crucial factors to take into account when creating Saudi Aramco's consolidated financial statements is the anticipated discount rate that will be used to calculate the present value of future cash flows. The timing and magnitude of upcoming capital investments, future cash flows from operations, and anticipated future production of oil and gas reserves can all be impacted by the discount rate."