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AXIOM MINING LIMITED
ANNUAL REPORT 2015
47
Notes to the
financial statements
for the year ended 30 September 2015
GROUP FINANCIAL REPORT
2. Significant accounting policies
(continued)
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
–
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) are
charged or credited outside profit or loss when the tax
relates to items that are recognised outside profit or loss.
Except for business combinations, no deferred income
tax is recognised from the initial recognition of an asset or
liability, where there is no effect on accounting or taxable
profit or loss.
Deferred tax assets and liabilities are calculated at
the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled and
their measurement also reflects the manner in which
management expects to recover or settle the carrying
amount of the related asset or liability. With respect to
non-depreciable items of property, plant and equipment
measured at fair value and items of investment property
measured at fair value, the related deferred tax liability
or deferred tax asset is measured on the basis that the
carrying amount of the asset will be recovered entirely
through sale.
Deferred tax assets relating to temporary differences and
unused tax losses are recognised only to the extent that
it is probable that future taxable profit will be available
against which the benefits of the deferred tax asset can
be utilised.