PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 517
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
o. Stripping costs continued
The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity that improves access to the identified component of the coal body, plus an allocation of directly
attributable overhead costs. If incidental operations are occurring at the same time as the production stripping activity, but are not necessary for the production stripping activity to continue as planned, the costs associated with these
incidental operations are not included in the cost of the stripping activity asset. When the costs of the stripping activity asset and the inventory produced are not separately identifiable, the Group
allocates the production stripping costs between the inventory produced and the stripping activity asset by using an allocation basis that is based on a relevant production measure. This production measure is calculated for the
identified component of the coal body, and is used as a benchmark to identify the extent to which the additional activity of creating a future benefit has taken place. The Group uses the expected volume of waste extracted compared
with the actual volume, for a given volume of coal production. Subsequently, the stripping activity asset is carried at cost less amortisation and impairment losses, if any. The
stripping activity asset is amortised using the unit-of-production method over the expected useful life of the identified component of the coal body that becomes more accessible as a result of the stripping activity unless another method is
more appropriate. Changes to the expected useful life of the identified component of the coal body are considered changes in estimates
and are accounted for on a prospective basis. The stripping activity asset is accounted for as an addition to, or an enhancement of, an existing asset, therefore it has
been presented as part of mining properties in the consolidated statement of financial position.
Stripping activity assets are included in the cost base of assets when determining a CGU for impairment assessment purposes.
As at the date of these consolidated financial statements, the Group did not have stripping costs during the production phase which qualify for deferral in accordance with the Group’s accounting policies.
p. Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less. If not, they
are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
q. Leases
The determination of whether an arrangement is, or contains, a lease is made based on the substance of the arrangement and an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific
asset or assets, and the arrangement conveys a right to use the asset.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases net of any incentives received from the lessor are charged to
profit or loss on a straight-line basis over the term of the lease. Leases of fixed assets where the Group as lessee has substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments. The corresponding rental obligations, net of finance
charges, are included in “finance lease payables”.
Each lease payment is allocated between the payables and finance charges. The interest element of the finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the payables for each period.
169
AdARo ENERgy 2014 ANNuAl REPoRT
PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 518
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
q. Leases continued
