1. Statement of Accounting Policies (continued) (r) Restoration (s) Employee benefits (t) Employee share o wner ship plans (u) Income tax of usage, degree of technical obsolescence, expected commercial life and the period of time during which the right or entitlement to the asset exists. The depreciation rates are reviewed and reassessed periodically in light of technical and economic developments. The useful lives for each class of onshore asset will vary depending on their individual technical and economic characteristics but will generally fall within the following ranges: Depreciation of offshore plant and equipment is calculated using a unit of production method which will proportionately depreciate the assets over the life of the Proven plus Probable (“2P”) reserves on a field by field basis. Depletion charges are calculated using a unit of production method which will amortise, over the life of the 2P reserves, exploration and development expenditure together with future costs necessary to develop the reserves in the respective areas of interest. Depletion is not charged on costs carried forward in respect of areas of interest in the development stage until production commences. Provisions are made for environmental restoration of areas of interest where gas and petroleum production is undertaken. Such provisions recognise the estimated future restoration obligations incrementally over the life of the reserves on a unit of production basis. The estimated future obligations include removing of facilities, abandoning of wells and restoring the affected areas. Estimates  for the future restor ation obligations are reviewed and r eassessed r egularly, based on current legal r equir ements and technology and ar measured in current dollars on an un discoun ted basis. Adjustments to th provisions are made on a prospective basis . The Company an several controlled entities contribute to a n umber of defined benefit and cash accumulati on superannuation plans. Contribution are recognised as an expense as they ar made. Shares issued under the Santos Executive Share Plan, Santos Ex ecutive Share Option Plan and the Santos Employee Share Purchase Plan are r ecorded as contributed equity at the fair value of the consideration r eceived , if any. The value of th shares issued to eligible employees under th e Santos Employee Share Acquisition Plan is expensed over a three year period. Tax effect accounting is applied whereby the income tax charged in the statements of financial performance is matched with the accounting profit after allowing for permanent differences. Income tax on timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is carried forward in the statements of financial position as a deferred tax asset or deferred tax liability. Future income tax benefits relating to entities which incur losses are brought to account where realisation of the benefits is considered to be virtually certain. Santos Ltd is the head entity in the tax-consolidated group comprising all the Australian resident wholly-owned controlled entities set out in note 22. The implementation date for the tax-consolidated group was  1 January 2003. The head entity recognises all of the current and deferred tax assets and liabilities of the tax-consolidated group. The tax-consolidated group has entered  into a tax funding agreement that requires wholly-owned subsidiaries to make contributions to the head entity for tax liabilities and deferred tax balances arising from external transactions occurring after implementation of tax consolidation. The contributions are calculated as a percentage of profit from ordinary activities before income tax expense. Contributions are payable following payment of the liabilities by Santos Ltd. The assets and liabilities arising under the tax funding agreement are recognised as intercompany assets and liabilities with a consequential adjustment to income tax expense or revenue. The tax-consolidated group has also entered into a tax sharing agreement pursuant to which the wholly-owned controlled entities may be required to contribute to the tax liabilities of Santos Ltd in the event of default by Santos Ltd or upon leaving the group. The Company oper ates a number of share ownership plans. Annual Report 2004 55 • Plant and equipment – Computer equipment 3 – 5 years – Motor vehicles 4 – 7 years – Furniture and fittings 10 – 20 years – Pipelines 10 – 30 years – Plant and facilities 10 – 50 years • Buildings 20 – 50 years The provisions for employee benefits for wages, salaries an annual leave expected to be settled within twelve months of the balance date repr esen t present obligations resulting from employees services provided to balance date calculated at undiscounted am oun ts based on remuneration wag and salary rates that the Santos Group e xpects to pay as at balance date inclu ding related on-costs. Long service leave is provided in respect of all employees based on the present value of the estim ated future cash outflow to be made resultin g from employees’ services up to balan ce date. The provision is calculated usin expected future increases in wag and salary rates including related on-costs and expected settlement dates and is discounted using the rates attached to the Commonwealth Government bonds at balance date which most closely match th e terms of maturity of the related li abiliti es.