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BP Business Economic Loss Claim Appeal 2016-1798: No Need To Reallocate End-of-Year COGS Throughout the Year

The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms.

Claimant received a BEL award of $364,708.74 pre-RTP. BP appeals, raising 2 issues in its Notice of Appeal, but preserving only 1 of these issues in its subsequent
Memorandum. BP’s sole remaining argument is that the Program erred in its treatment of claimant’s COGS expense.
Appellant contends recorded no COGS from January through November in 2009 as well as 2010 and then recorded substantial COGS in December of each of those years. BP suggests if these expenses were properly allocated throughout the year, claimant might fail the V-Shaped Revenue pattern under Exhibit 4B.
However, as Claimant explains, the year end adjustments referenced by BP were merely reclassifications from one account in the P and L’s to another account. Since both accounts were designated as variable, the reclassifications had no effect on the total for variable expenses. The Program took note of these reclassifications and properly recognized the reclassifications had no impact on the award.
BP’s appeal is dismissed and the award in favor of the claimant is affirmed.

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