Axiom 2014 Annual Report - page 54

Notes to the Financial Statements
for the year ended 30 September 2014
52
Axiom Mining Limited
2. Significant accounting policies (continued)
Impairment losses are written-off against the
corresponding assets directly, except for impairment losses
recognised in respect of other receivables whose recovery
is considered doubtful but not remote. In this case, the
impairment losses for doubtful debts are recorded using
an allowance account. When the Group is satisfied that
recovery is remote, the amount considered irrecoverable
is written-off against other receivables directly and any
amounts held in the allowance account relating to that debt
are reversed. Subsequent recoveries of amounts previously
charged to the allowance account are reversed against
the allowance account. Other changes in the allowance
account and subsequent recoveries of amounts previously
written-off directly are recognised in profit or loss.
ii. Impairment of mineral exploration expenditure
The carrying amount of the mineral exploration
expenditure is reviewed annually and adjusted for
impairment whenever one of the following events or
changes in circumstances indicates that the carrying
amount may not be recoverable:
––
the period for which the Group has the right to
explore in the specific area has expired during the
period or will expire in the near future, and is not
expected to be renewed;
––
substantive expenditure on further exploration for
and evaluation of mineral resources in the specific
area is neither budgeted nor planned;
––
exploration for and evaluation of mineral resources
in the specific area have not led to the discovery of
commercially viable quantities of mineral resources
and the Group has decided to discontinue such
activities in the specific area; or
––
sufficient data exist to indicate that, although a
development in the specific area is likely to proceed,
the carrying amount of the mineral exploration
expenditure is unlikely to be recovered in full from
successful development or by sale.
An impairment loss is recognised in profit or loss
whenever the carrying amount of an asset exceeds its
recoverable amount.
iii. Impairment of other assets
Internal and external sources of information are
reviewed at each balance sheet date to identify
indications that the following assets may be impaired
or an impairment loss previously recognised no longer
exists or may have decreased:
––
property, plant and equipment; and
––
investments in subsidiaries in the Parent company’s
balance sheet.
If any such indication exists, the asset’s recoverable
amount is estimated.
Calculation of recoverable amount
The recoverable amount of an asset is the greater of its
net selling price and value in use. In assessing value
in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and the risks specific to the asset.
Where an asset does not generate cash inflows largely
independent of those from other assets, the recoverable
amount is determined for the smallest group of assets
that generates cash inflows independently (i.e. a cash-
generating unit).
Recognition of impairment losses
An impairment loss is recognised in profit or loss
whenever the carrying amount of an asset, or the
cash-generating unit to which it belongs, exceeds its
recoverable amount. Impairment losses recognised in
respect of cash-generating units are allocated to reduce
the carrying amount of assets in the unit (or group of
units) on a pro rata basis, except that the carrying value
of an asset will not be reduced below its individual fair
value less costs to sell, or value in use, if determinable.
Reversal of impairment losses
An impairment loss is reversed if there has been a
favourable change in the estimates used to determine
the recoverable amount.
A reversal of an impairment loss is limited to the asset’s
carrying amount that would have been determined
had no impairment loss been recognised in prior years.
Reversals of impairment losses are credited to profit or
loss in the year in which the reversals are recognised.
j. Income tax
The income tax expense/(benefit) for the year comprises
current income tax expense/(benefit) and deferred tax
expense/(benefit).
Current income tax expense charged to profit or loss
is the tax payable on taxable income. Current tax
liabilities/(assets) are measured at the amounts expected
to be paid to/(recovered from) the relevant taxation
authority.
Deferred income tax expense reflects movements in
deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.
Current and deferred income tax expense/(benefit) is
charged or credited outside profit or loss when the tax
relates to items that are recognised outside profit or loss.
GROUP FINANCIAL REPORT
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