Axiom 2014 Annual Report - page 94

Notes to the Financial Statements
for the year ended 30 September 2014
92
Axiom Mining Limited
4. Summary of significant accounting
policies (continued)
If any such evidence exists, any impairment loss is
determined and recognised as follows:
––
for unquoted equity securities carried at cost, the
impairment loss is measured as the difference
between the carrying amount of the financial asset
and the estimated future cash flows, discounted
at the current market rate of return for a similar
financial asset where the effect of discounting is
material. Impairment losses for equity securities
carried at cost are not reversed.
––
for trade and other current receivables, the
impairment loss is measured as the difference
between the asset’s carrying amount and the present
value of estimated future cash flows, discounted
at the financial asset’s original effective interest
rate (i.e. the effective interest rate computed at
initial recognition of these assets), where the effect
of discounting is material. This assessment is
made collectively where financial assets carried at
amortised cost share similar risk characteristics,
such as similar past due status, and have not been
individually assessed as impaired. Future cash
flows for financial assets which are assessed for
impairment collectively are based on historical loss
experience for assets with credit risk characteristics
similar to the collective group.
If in a subsequent period the amount of an impairment
loss decreases and the decrease can be linked objectively
to an event occurring after the impairment loss was
recognised, the impairment loss is reversed through
profit or loss. A reversal of an impairment loss shall not
result in the asset’s carrying amount exceeding that
which would have been determined had no impairment
loss been recognised in prior years.
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
Company 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.
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 Company 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 Company 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.
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 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).
COMPANY FINANCIAL REPORT
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