Doosan Corporation Notes to the Separate Financial Statements December 31, 2019 and 2018

Doosan Corporation Notes to the separate financial statements December 31, 2019 and 2018 1. General Doosan Corporation (the “Company”) was incorporated on December 18, 1933, under the name of Sohwa-Kirin Beer, Ltd. to manufacture and sell beer. The Company has changed its name to Dongyang Beer, Ltd. in February 1948 and again to OB Beer, Ltd. in February 1996 and finally to Doosan Corporation on September 1, 1998. Since June 1973, the Company’s shares have been listed in the Korea Exchange. After several capital issues, the Company’s share capital as of December 31, 2019, is ￦123,738 million, including ￦24,447 million of preferred shares. The Company’s ordinary shares as of December 31, 2019 are owned as follows: Number of ordinary Ownership shares owned percentage (%) Related parties 7,805,623 47.24 Treasury stocks 3,000,866 18.16 Others 5,717,346 34.60 16,523,835 100.00 Meanwhile, 35.9% of preferred shares are owned by the largest shareholder and others and 51.6% of preferred shares are owned by others. 2. Summary of significant accounting policies 2.1 Basis of preparation The Company prepares statutory financial statements in Korean in accordance with KIFRS enacted by the Act on External Audit of Stock Companies. The Company’s financial statements are separate financial statements prepared in accordance with KIFRS 1027 Separate Financial Statements, in which the controlling company, investors of associates or participants of joint control company have stated investment assets as accounting based on direct equity investment, not based on the reported performance and net assets of the investee. The accompanying separate financial statements have been translated into English from Korean financial statements. In the event of any differences in interpreting the financial statements or the independent auditor’s report thereon, Korean version, which is used for regulatory reporting purposes, shall prevail. Significant accounting policies applied in the preparation of the separate financial statements are described below. Significant accounting policies applied in the preparation of the separate financial statements for the year ended December 31, 2019 are the same as those adopted in the preparation of the separate financial statements for the year ended December 31, 2018, except for the effects related to the adoption of the standards or interpretations described below. The accompanying separate financial statements have been prepared on the historical cost basis, except for certain properties/non-current assets and financial instruments that are measured at fair values, as explained in the accounting policies below. Historical cost is based on the fair values of the consideration given in exchange for assets. 7 7 Doosan Corporation Notes to the separate financial statements December 31, 2019 and 2018 2.2 Changes of accounting policies and disclosure 2.2.1 New and amended standards and interpretations The Company applied KIFRS 1116 Leases. The nature and effect of the changes as a result of adoption of these new accounting standards are described below. Several other amendments and interpretations apply for the first time in 2019, but do not have an impact on the financial statements of the Company. The Company has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective. KIFRS 1116 Leases KIFRS 1116 supersedes KIFRS 1017 Leases, KIFRS 2104 Determining whether an Arrangement contains a Lease, KIFRS 2015 Operating Leases-Incentives and KIFRS 2027 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognize most leases on the financial statements. Lessor accounting under KIFRS 1116 is substantially unchanged from KIFRS 1017. Lessors will continue to classify leases as either operating or finance leases using similar principles as in KIFRS 1017. Therefore, KIFRS 1116 does not have an impact for leases where the Company is the lessor. The Company adopted KIFRS 1116 using the full retrospective method of adoption, with the date of initial application of January 1, 2019. In the full retrospective method of adoption, KIFRS 1116 is applied retrospectively to recognize the cumulative effect of initial application at the date of initial application. The Company elected to use the transition practical expedient to not reassess whether a contract is, or contains, a lease at January 1, 2019. Instead, the Company applied the standard only to contracts that were previously identified as leases applying KIFRS 1017 and KIFRS 2104 at the date of initial application. The Company also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value assets). 8 8 Doosan Corporation Notes to the separate financial statements December 31, 2019 and 2018 2.2.1 New and amended standards and interpretations (cont’d) The effects of the initial application of KIFRS 1116 on the consolidated statements of financial position as of 1 January 2019 is as follows (Korean won in millions). Increase(decrease) Assets Tangible assets \ 12,216 Right-of-use assets 12,216 Buildings and Structures 9,270 Other tangible assets 2,946 Total assets \ 12,216 Liabilities Other Liabilities (*1) \ (5,253) Current lease liabilities 10,934 Long-term other liabilities (*1) (7,195) Non-current lease liabilities 13,730 Total liabilities \ 12,216 Equity Retained-earnings \ - Total equity \ - (*1) Decreases due to account reclassification to lease liabilities. The Company has lease contracts for various items of buildings, vehicle transportations and other office equipments. Before the adoption of KIFRS 1116, the Company classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease. Leases that are transferred most of the risks and rewards of ownership of the lease assets are classified as finance leases and other leases as operating lease. In the case of a finance lease, small amounts of the present value of the minimum lease payment measured at the lease agreement date and the fair value of the lease assets were recognized as financial lease assets and financial lease liabilities at the lease commencement date, respectively. The minimum lease fee paid per annum was divided into financial cost and lease liability repayment amount. In the operating lease, the lease fee was recognized as an expense in the income statement on a flat basis over the lease term. Upon adoption of KIFRS 1116, the Company applied a single recognition and measurement approach for all leases for which it is the lessee, except for short-term leases and leases of low-value assets. For accounting policies beginning on 1 January 2019, see Note 2.8 Leases. The standard provides specific transition requirements and practical expedients, which have been applied by the Company. ▷ Lease previously classified as finance leases The Company did not change the initial carrying amounts of recognized assets and liabilities at the date of initial application for leases previously classified as finance leases (i.e., the right-of-use assets and lease liabilities equal the lease assets and liabilities recognized under KIFRS 1017). The requirements of KIFRS 1116 were applied to these leases from 1 January 2019. ▷ Leases previously accounted for as operating leases The Company recognized right-of-use assets and lease liabilities for those leases previously classified as operating leases, except for short-term leases and leases of low-value assets. The right-of-use assets for most leases were recognized based on the carrying amount as if the standard had always been applied, apart from the use of incremental borrowing rate at the date of initial application. In some leases, the right-of-use assets were recognized based on the amount equal to the lease liabilities, adjusted for any related prepaid and accrued lease payments previously recognized. Lease liabilities were recognized based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application. 9 9 Doosan Corporation Notes to the separate financial statements December 31, 2019 and 2018 2.2.1 New and amended standards and interpretations (cont’d) The Company has also applied the available practical expedients wherein it: Used a single discount rate to a portfolio of leases with reasonably similar characteristics Relied on its assessment of whether leases are onerous immediately before the date of initial application Applied the short-term leases exemptions to leases with lease term that ends within 12 months of the date of initial application Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application Used hindsight in determining the lease term where the contract contained options to extend or terminate the lease The lease liabilities as at 1 January 2019 can be reconciled to the operating lease commitments as of 31 December 2018, as follows (Korean won in millions). Amount Operating lease agreement as of December 31, 2018 \ 15,787 Less: Contingency related to short-term leases and leases of low-value assets (2,844) 12,943 Weighted average incremental borrowing rate as at 1 January 2019 3.67%~5.26% Discounted operating leases (excluding short-term leases and leases of low- value assets) as at 1 January 2019 12,216 Add: Commitments relating to leases previously classified as finance leases 12,448 Lease liabilities as at 1 January 2019 \ 24,664 Amendments to KIFRS 2123 Uncertainty over Income Tax Treatments The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of KIFRS 1012 Income Taxes.

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