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Notes to the Financial Statements (cont’d)<br />
For the financial year ended 31 December 2011<br />
2. Summary of significant accounting policies (cont’d)<br />
92<br />
2.11 Mine environmental expenditure<br />
Restoration, rehabilitation and environmental expenditure incurred during the production phase of operations is<br />
recognised in profit or loss as part of the cost of production of the mine property concerned.<br />
Significant restoration, rehabilitation and environmental expenditure to be incurred subsequent to the cessation of<br />
production of each mine property is provided based on the present value of the estimated expenditure to be incurred.<br />
2.12 Property, plant and equipment and depreciation<br />
All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s<br />
carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic<br />
benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other<br />
repairs and maintenance costs are recognised in profit or loss during the financial period in which they are incurred.<br />
Subsequent to recognition, property, plant and equipment except for freehold land and buildings are stated at cost less<br />
accumulated depreciation and any accumulated impairment losses.<br />
Freehold land and buildings are stated at revalued amount, which is the fair value at the date of the revaluation less any<br />
accumulated depreciation and accumulated impairment losses. Fair value is determined from market-based evidence<br />
by appraisal that is undertaken by professionally qualified valuers. Revaluations are performed with sufficient regularity<br />
to ensure that the carrying amount of a revalued asset does not differ materially from that which would be determined<br />
using fair values at the reporting date. Any revaluation surplus is recognised in other comprehensive income and<br />
accumulated in equity under the revaluation reserve, except to the extent that it reverses a revaluation decrease of the<br />
same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation<br />
deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in<br />
the revaluation reserve.<br />
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset<br />
and the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the revaluation<br />
reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.<br />
In the tin mining subsidiaries, plant and equipment used in mining are depreciated using the unit-of-production method<br />
based on economically recoverable ore reserves and resources over the estimated useful lives of the assets. Changes<br />
in estimated ore reserves and resources and the useful lives of plant and equipment are accounted for on a prospective<br />
basis from the beginning of the year in which the change arises. Earthmoving vehicles are depreciated based on an hour<br />
worked basis over the estimated useful life of each asset.<br />
Freehold land has an unlimited useful life and therefore is not depreciated. Capital work-in-progress are also not<br />
depreciated as these assets are not available for use. Depreciation of other property, plant and equipment of the Group<br />
is provided for on the straight-line method to write off the cost of each asset to its residual value over the shorter of their<br />
estimated economic useful lives or life of the mine where appropriate. The estimated useful lives are as follows:<br />
Buildings 8 to 40 years or life of mine, where appropriate,whichever is shorter<br />
Plant, equipment and vehicles 3 to 40 years<br />
Furniture 4 to 10 years<br />
Mine restoration Life of mine<br />
The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount,<br />
method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of<br />
the future economic benefits embodied in the items of property, plant and equipment.<br />
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are<br />
expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount<br />
is recognised in profit or loss.<br />
Building on Success: Developing Resources for the Future