Icon Energy Limited Annual Report 2022

ICON ENERGY LIMITED AND ITS CONTROLLED ENTITIES FOR THE YEAR ENDED 30 JUNE 2022 (q) Inventories (r) Leases - - - - - - - - - Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. Leases are recognisd as a right-of-use asset and a corresponding liability. NOTE 23 - STATEMENT OF ACCOUNTING POLICIES (Continued) Right-of-use assets are measured at cost comprising the following: fixed payments (including in-substance fixed payments), less any lease incentives receivable variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date amounts expected to be payable by the Group under residual value guarantees the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. any lease payments made at or before the commencement date less any lease incentives received Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straightline basis. restoration costs. Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost comprises direct materials and delivery costs, direct labour, import duties and other taxes and an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity. Costs of purchased inventory are determined after deducting rebates and discounts received or receivable. Inventories consist of drilling consumables predominantly chemicals and proppant. the amount of the initial measurement of lease liability Payments associated with short term leases and leases of low value assets are recognised in profit and loss on a straightline basis with a lease term of 12 months or less. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: any initial direct costs, and The lease payments are discounted using the lessee’s incremental borrowing rate, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. Icon Energy Annual Report 2022 59