68 Consolidated  Notes to the  Financial  Statements Note 1 – Summary of significant accounting policies  (continued) Non-current assets and the assets of a disposal group classified as  held for sale are presented separately from the other assets on the  face of the statement of financial position. The liabilities of a  disposal group classified as held for sale are presented separately  from other liabilities on the face of the statement of financial  position. Exploration and evaluation expenditure incurred is accumulated in  respect of each identifiable area of interest. An area of interest  refers to an individual geological area where the presence of oil or a  gas field is considered favourable or has been proved to exist, and  in most cases will comprise an individual oil or gas field. Exploration and evaluation expenditure is recognised as an  exploration and evaluation asset in the year in which it is incurred,  provided the rights to tenure of the area of interest are current  and either: Property, plant and equipment is stated at cost less accumulated  depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the  acquisition or construction of the asset. Finance costs related to  the acquisition or construction of qualifying assets are capitalised.  Cost may also include transfers from other comprehensive income  of any gain or loss on qualifying cash flow hedges of foreign  currency purchases of property, plant and equipment. Subsequent costs are included in the asset’s carrying amount or  recognised as a separate asset, as appropriate, only when it is  probable that future economic benefits associated with the item  will flow to the consolidated entity and the cost of the item can be  measured reliably. All other repairs and maintenance are recognised  in profit or loss as incurred. The gain or loss arising on disposal or retirement of an item of  property, plant and equipment is determined as the difference  between the sales proceeds and the carrying amount of the asset  and is recognised in profit or loss. Depreciation is provided on property, plant and equipment,  including freehold buildings but excluding land. Depreciation is  calculated on a straight-line basis so as to write off the cost of each  asset over its expected useful life to its estimated residual value.  Leasehold improvements are amortised over the period of the  relevant lease or estimated useful life, whichever is the shorter. – exploration and evaluation expenditure is expected to be  recovered through successful development and exploration of  the area of interest, or alternatively, by its sale; or – exploration and evaluation activities in the area of interest have  not, at the end of the reporting period, reached a stage which  permits reasonable assessment of the existence of economically  recoverable reserves and active and significant operations in, or  in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and  include acquisition of rights to explore, studies, exploratory drilling,  trenching and sampling and associated activities. General and  administrative costs are only included in the measurement of  exploration and evaluation costs where they are related directly to  operational activities in a particular area of interest. The carrying amounts of the consolidated entity’s exploration and  evaluation assets are reviewed at the end of each reporting period,  in conjunction with the impairment review process referred to in  Note 1(u), to determine whether there is any indication that the  assets have suffered an impairment loss. The estimated useful lives, residual values and depreciation method  are reviewed, and adjusted if appropriate at the end of each annual  reporting period. The following estimated useful lives are used in the calculation of  depreciation: Leases are classified as finance leases whenever the terms of the  lease transfer substantially all the risks and rewards of ownership of  the leased asset to the lessee. All other leases are classified as  operating leases. When an oil or gas field has been approved for development, the  accumulated exploration and evaluation expenditure is transferred  to oil and gas assets. The costs of oil and gas assets in development are separately  accounted for and include past exploration and evaluation costs,  development drilling and other subsurface expenditure, surface  plant and equipment and any associated land and buildings. When  commercial operation commences, the accumulated costs are  transferred to oil and gas assets – producing assets. The costs of oil and gas assets in production are separately  accounted for and include past exploration and evaluation costs,  past development costs and the ongoing costs of continuing to  develop reserves for production and to expand or replace plant and  equipment and any associated land and buildings. Assets held under finance leases are initially recognised as assets of  the consolidated entity at their fair value at the inception of the  lease or, if lower, at the present value of the minimum lease  payments. The corresponding liability to the lessor is included in the  statement of financial position as a finance lease liability. Lease payments are apportioned between finance charges and  reduction of the lease liability so as to achieve a constant rate of  interest on the remaining balance of the liability. Finance charges  are recognised as an expense in the income statement. Assets held under finance leases are depreciated over their  expected useful lives on the same basis as owned assets or, where  shorter, the term of the relevant lease. Operating lease payments are recognised as an expense on a  straight-line basis over the lease term, except where another  systematic basis is more representative of the time pattern in  which economic benefits from the leased asset are consumed.  Contingent rentals arising under operating leases are recognised as  an expense in the period in which they are incurred. When production commences, the accumulated costs for the  relevant area of interest are amortised over the life of the area  according to the rate of depletion of the economically recoverable  reserves. Producing assets Assets in development (q) Oil and gas assets (s) Leased assets Freehold buildings  50 years Leasehold improvements  lesser of lease period or 20 years Plant and equipment  3 to 25 years or relevant units of use (r) Property, plant and equipment (p) Exploration and evaluation assets