PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 516
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2014 AND 2013
Expressed in thousands of US Dollars, unless otherwise stated
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
m. Exploration and evaluation assets continued
As the exploration and evaluation assets are not available for use, they are not depreciated. Exploration and evaluation assets are assessed for impairment if facts and circumstances indicate that impairment may
exist. Exploration and evaluation assets are also tested for impairment once commercial reserves are found, before the assets are transferred to “mining properties - mines under development”.
Expenditure incurred before the entity has obtained the legal right to explore a specific area is expensed as incurred.
n. Mining properties
Development expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest in which economically recoverable resources have been identified. Such expenditure comprises costs directly attributable
to the construction of a mine and the related infrastructure and excludes physical assets and land rights i.e. right to build, right to cultivate and right to use, which are recorded as fixed assets.
Once a development decision has been taken, the carrying amount of the exploration and evaluation assets in respect of the area of interest is transferred to “mines under development” within mining properties and aggregated with the
subsequent development expenditure.
“Mines under development” are reclassified as “mines in production” within mining properties at the end of the commissioning phase, when the mine is capable of operating in the manner intended by management.
No amortisation is recognised for “mines under development” until they are reclassified as “mines in production’’. When further development expenditure is incurred on a mining property after the commencement of production, the
expenditure is carried forward as part of the “mines in production” when it is probable that additional future economic benefits associated with the expenditure will flow to the Group. Otherwise such expenditure is classified as a cost of
production. “Mines in production” including reclassified exploration, evaluation and any development expenditure, and payments
to acquire mineral rights and leases are amortised using the unit-of-production method, with separate calculations being made for each area of interest. “Mines in production” will be depleted using a unit-of-production method on the
basis of proved and probable reserves. Identifiable mining properties acquired in a business combination are initially recognised as assets at their fair value.
Development expenses incurred subsequent to the acquisition of the mining properties are accounted for in accordance with the policy outlined above.
“Mines under development” and “mines in production” are tested for impairment in accordance with the policy described in Note 2l.
o. Stripping costs
