PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 515
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
k. Goodwill
Goodwill arises from the acquisition of subsidiaries, and represents the excess of the consideration transferred over the interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair
value of the non-controlling interest in the acquiree. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each cash-
generating units “CGU”, or group of CGUs, that is expected to benefit from the synergies of the combination. Each CGU or group of CGUs to which the goodwill is allocated represents the lowest level within the entity at which goodwill
is monitored for internal management purposes. Goodwill is monitored at operating segment level.
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 but tested annually for impairment, or more frequently if 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. Non-financial assets other than goodwill that suffer impairment are
reviewed for possible reversal of the impairment at each reporting date.
Reversal on impairment losses for assets other than goodwill is 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 should not result in the carrying amount of an asset exceeding what the depreciated cost would have been had the impairment not been recognised at
the date on which the impairment was reversed. Impairment losses relating to goodwill will 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 a 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.
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 assets 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.
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AdARo ENERgy 2014 ANNuAl REPoRT
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
