Axiom 2014 Annual Report - page 93

Notes to the Financial Statements
for the year ended 30 September 2014
91
2014 Annual Report
4. Summary of significant accounting
policies (continued)
When production commences, the accumulated costs
for the relevant area of interest are amortised over the
life of the area according to the rate of depletion of the
economically recoverable reserves.
A regular review is undertaken of each area of interest
to determine the appropriateness of continuing to
capitalise costs in relation to that area.
Costs of site restoration are provided for over the life of
the project from when exploration commences and are
included in the costs of that stage. Site restoration costs
include the dismantling and removal of mining plant,
equipment and building structures, waste removal,
and rehabilitation of the site in accordance with local
laws and regulations and clauses of the permits. Such
costs have been determined using estimates of future
costs, current legal requirements and technology on an
undiscounted basis.
Any changes in the estimates for the costs are accounted
for on a prospective basis. In determining the costs
of site restoration, there is uncertainty regarding the
nature and extent of the restoration due to community
expectations and future legislation. Accordingly,
the costs have been determined on the basis that
the restoration will be completed within one year of
abandoning the site.
Leases
An arrangement, comprising a transaction or a series
of transactions, is or contains a lease if the Company
determines that the arrangement conveys a right to a
specific asset or assets for an agreed period of time in
return for a payment or a series of payments. Such a
determination is made based on an evaluation of the
substance of the arrangement regardless of whether the
arrangement takes the legal form of a lease.
Assets that are held by the Company under leases that
transfer to the Company substantially all the risks and
rewards of ownership are classified as being held under
finance leases. Leases that do not transfer substantially
all the risks and rewards of ownership to the Company
are classified as operating leases, with the following
exception: land held for own use under an operating
lease, the fair value of which cannot be measured
separately from the fair value of a building situated
thereon at the inception of the lease, is accounted for
as being held under a finance lease, unless the building
is also clearly held under an operating lease. For these
purposes, the inception of the lease is the time that the
lease was first entered into by the Company, or taken
over from the previous lessee.
Where the Company acquires the use of assets under
finance leases, the amounts representing the fair value
of the leased asset, or, if lower, the present value of the
minimum lease payments, of such assets is included
in fixed assets and the corresponding liabilities, net
of finance charges, are recorded as obligations under
finance leases. Depreciation is provided at rates that
write off the cost or valuation of the assets over the term
of the relevant lease or, where it is likely the Company
will obtain ownership of the asset, the life of the asset,
as set out in Note 4. Finance charges implicit in the lease
payments are charged to profit or loss over the period of
the leases so as to produce an approximately constant
periodic rate of charge on the remaining balance of
the obligations for each accounting period. Contingent
rentals are charged to profit or loss in the accounting
period in which they are incurred.
Where the Company has the use of assets held under
operating leases, payments made under the leases are
charged to profit or loss in equal instalments over the
accounting periods covered by the lease term, except
where an alternative basis is more representative of the
pattern of benefits to be derived from the leased asset.
Lease incentives received are recognised in profit or loss
as an integral part of the aggregate net lease payments
made. Contingent rentals are charged to profit or loss in
the accounting period in which they are incurred.
Impairment of investments in equity securities and
other receivables
Investments in equity securities and other current
and non-current receivables that are stated at cost or
amortised cost, are reviewed at each balance sheet date
to determine whether there is objective evidence of
impairment. Objective evidence of impairment includes
observable data that comes to the attention of the
Company about one or more of the following loss events:
––
significant financial difficulty of the debtor;
––
a breach of contract, such as a default or
delinquency in interest or principal payments;
––
it becoming probable that the debtor will enter
bankruptcy or other financial reorganisation; and
––
significant changes in the technological, market,
economic or legal environment that have an adverse
effect on the debtor;
––
a significant or prolonged decline in the fair value of
an investment in an equity instrument below its cost.
COMPANY FINANCIAL REPORT
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