b'KOSMOS ENERGY LTD.Notes to Consolidated Financial Statements (Continued)2. Accounting Policies (Continued)Depletion, Depreciation and AmortizationProved properties and support equipment and facilities are depleted using the unit-of-productionmethod based on estimated proved oil and natural gas reserves. Capitalized exploratory drilling coststhat result in a discovery of proved reserves and development costs are amortized using theunit-of-production method based on estimated proved developed oil and natural gas reserves for therelated field.Depreciation and amortization of other property is computed using the straight-line method overthe assets estimated useful lives (not to exceed the lease term for leasehold improvements), rangingfrom one to eight years.YearsDepreciatedLeasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 to 8Office furniture, fixtures and computer equipment . . . . . . . . . . . . . . . . . 3 to 7Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Amortization of deferred financing costs is computed using the straight-line method over the lifeof the related debt.Capitalized InterestInterest costs from external borrowings are capitalized on major projects with an expectedconstruction period of one year or longer. Capitalized interest is added to the cost of the underlyingasset and is depleted on the unit-of-production method in the same manner as the underlying assets.Asset Retirement ObligationsThe Company accounts for asset retirement obligations as required by ASC 410Asset Retirementand Environmental Obligations. Under these standards, the fair value of a liability for an assetretirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fairvalue can be made. If a reasonable estimate of fair value cannot be made in the period the assetretirement obligation is incurred, the liability is recognized when a reasonable estimate of fair value canbe made. If a tangible long-lived asset with an existing asset retirement obligation is acquired, a liabilityfor that obligation is recognized at the assets acquisition or in service date. In addition, a liability forthe fair value of a conditional asset retirement obligation is recorded if the fair value of the liability canbe reasonably estimated. We capitalize the asset retirement costs by increasing the carrying amount ofthe related long-lived asset by the same amount as the liability. We record increases in the discountedabandonment liability resulting from the passage of time in depletion and depreciation in theconsolidated statement of operations.Impairment of Long-lived AssetsThe Company reviews its long-lived assets for impairment when changes in circumstances indicatethat the carrying amount of an asset may not be recoverable, or at least annually. ASC 360Property,Plant and Equipment requires an impairment loss to be recognized if the carrying amount of along-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset113'