176
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IABlE, STrong, EFFICIEnT
PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 516
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2013 AND 2012
Expressed in thousands of
Ì
S Dollars, unless otherwise stated
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
j. Fixed assets and depreciation continued
For assets which are no longer utilised or sold or surrendered to the Government, the carrying amounts are eliminated from the consolidated financial statements and the resulting gains or losses on disposals of fixed assets
are recognised in profit or loss.
The accumulated costs of the construction of buildings and plants and the installation of machinery are capitalised as construction in progress. These costs are reclassified to the fixed asset accounts when the construction or
installation is completed and is ready for use in the manner intended by management. Depreciation is charged from that date.
k. Goodwill
Goodwill represents the excess of the acquisition cost over the fair value of the Group’s share of the identifiable net assets acquired.
l. Impairment of non-financial assets
Assets that have an indefinite useful life - for example, goodwill or intangible assets not ready to use - are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or
depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest level for
which there are separately identifiable cash flows cash generating units. Non-financial assets other than goodwill that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
Reversal on impairment loss for assets other than goodwill would be recognised if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment test was
carried out. Reversal on impairment losses will be immediately recognised in profit or loss. The reversal will not result in the carrying amount of an asset that exceeds what the depreciated cost would have been had the
impairment not been recognised at the date at which the impairment was reversed. Impairment losses relating to goodwill would not be reversed.
m. Exploration and evaluation assets
Exploration and evaluation activity involves the search for mineral resources after the Group has obtained legal rights to explore in a specific area, determination of the technical feasibility and assessment of the commercial
viability of an identified resource.
Exploration and evaluation expenditure comprises costs that are directly attributable to: -
acquisition of rights to explore; -
topographical, geological, geochemical and geophysical studies; -
exploratory drilling; -
trenching and sampling; and -
activities involved in evaluating the technical feasibility and commercial viability of extracting mineral resources.
Exploration and evaluation expenditure related to an area of interest is written off as incurred, unless it is capitalised and carried forward, on an area of interest basis, provided one of the following conditions is met:
i the rights of tenure of an area are current and it is considered probable that the costs will be recouped
through successful development and exploitation of the area of interest or, alternatively, by its sale; or ii exploration activities in the area of interest have not yet reached the stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in or in relation to the area of interest are continuing.
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DAro EnErgy 2013 AnnuAl rEporT
177
PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 517
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2013 AND 2012
Expressed in thousands of
Ï
S Dollars, unless otherwise stated
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
m. Exploration and evaluation assets continued
Capitalised costs include costs directly related to exploration and evaluation activities in the relevant area of interest, and exclude physical assets, which are recorded in fixed assets. General and administrative costs are
allocated to an exploration or evaluation asset only to the extent that those costs can be related directly to operational activities in the relevant area of interest.
Capitalised exploration and evaluation expenditure is written off where the above conditions are no longer satisfied. Identifiable exploration and evaluation assets acquired in a business combination are recognised initially as assets
at fair value on acquisition and subsequently at cost less impairment charges. Exploration and evaluation expenditure incurred subsequent to the acquisition of an exploration asset in a business combination is accounted
for in accordance with the policy outlined above.
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”.
n. Mining properties
