PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 57
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
Presented below are the significant accounting policies adopted in preparing the consolidated financial statements of the Group. These policies have been consistently applied to all the years presented, unless otherwise stated.
a. Basis of preparation of the consolidated financial statements
The Group’s consolidated financial statements have been prepared in conformity with Indonesian Financial Accounting Standards and the Decree of the Chairman of Bapepam-LK No. KEP-347BL2012 dated 25 June 2012 regarding the
Presentation and Disclosure of Financial Statements of Issuers or Public Companies.
The consolidated financial statements have been prepared under the historical cost convention, as modified by certain derivative instruments, and using the accrual basis except for the consolidated statements of cash flows.
The preparation of consolidated financial statements in conformity with Indonesian Financial Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note
4.
b. New and revised accounting standards and interpretations
There are no statements of financial accounting standards or interpretations of statements of financial accounting standards that are effective for the first time for the financial year beginning on 1 January 2014 that have a material
impact on the consolidated financial statements of the Group, except for Interpretation of Statements of Financial Accounting Standards “IFAS” No. 29, “Stripping Costs in the Production Phase of a Surface Mine”.
This interpretation sets out the accounting for overburden waste removal stripping costs in the production phase of a surface mine. The interpretation amends the current “life-of-mine average” approach promulgated under Statements
of Financial Accounting Standards “SFAS” No. 33 Revised 2011, “Stripping Activities and Environmental Management in General Mining”.
Previously, the ongoing stripping costs were normally recognised as production costs based on the annual planned stripping ratio. The annual planned stripping ratio was determined based on the average five years mine plan. In
situations where the actual stripping ratio was not significantly different from the planned stripping ratio, the stripping costs incurred during the year were recognised as production costs. When the actual stripping ratio was significantly
higher than the planned stripping ratio, the excess stripping costs were recorded in the consolidated statement of financial position as deferred stripping costs. These deferred costs were expensed as production costs in periods where
the actual ratio was significantly lower than the planned stripping ratio.
The interpretation requires that mining entities recognise a stripping activity asset if, and only if, all of the following criteria are met:
1. It is probable that the future economic benefit improved access to the ore body associated with the stripping
activity will flow to the mining entity; 2.
The mining entity can identify the component of the ore body for which access has been improved; and 3.
The costs relating to the stripping activity associated with that component can be measured reliably. There are two key changes in the Group’s previous accounting policy as a result of the adoption of IFAS No. 29. Firstly,
the initial recognition of the stripping asset and subsequent depreciation is determined with reference to components of the coal body rather than with reference to the entire operation. Secondly, the subsequent measurement of the asset
is recognised as depreciation on a unit of production basis, rather than as a charge to profit or loss when the actual stripping ratio is significantly lower than the planned stripping ratio.
The interpretation requires mining entities to write off existing stripping assets to opening retained earnings if the assets cannot be attributed to an identifiable component of the coal body. The interpretation may also require mining
entities that presently allocate their stripping costs as a production cost to revisit their approach and capitalise a portion of their costs.
Refer to Note 2o for the revised accounting policy from adopting IFAS No. 29 and Note 3 for the disclosure on the impact of adopting IFAS No. 29 on the Group’s consolidated financial statements.
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AdARo ENERgy 2014 ANNuAl REPoRT
PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 58
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
b. New and revised accounting standards and interpretations continued
