2010 Annual Report - Grange Resources

DECEMBER 2010 ANNUAL REPORT 43
Notes to the Financial Statements
NOTE 1.
SUMMARY OF SIGNIFICANT
aCCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
the consolidated financial report are set out below. These policies
have been consistently applied for all the periods presented,
unless otherwise stated.
The financial report is for the consolidated entity consisting of
Grange Resources Limited (the Company) and its subsidiaries.
(a) Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting
Standards Board, Urgent Issues Group Interpretations and
the Corporations Act 2001.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents
to International Financial Reporting Standards (AIFRS).
Compliance with AIFRS ensures that the consolidated financial
statements and notes of Grange Resources comply with
International Financial Reporting Standards (IFRS).
Historical cost convention
These financial statements have been prepared under the
historical costs convention, except for certain assets which,
as noted, are at fair value.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements, are disclosed in Note 3.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Grange Resources as at
31 December 2010 and the results of all subsidiaries for the
six month period then ended. Grange Resources Limited and its
subsidiaries together are referred to in this financial report as the
Group or the consolidated entity.
Subsidiaries are those entities over which the Group has the
power to govern the financial and operating policies, generally
accompanying a shareholding of more than one-half of the voting
rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are de-consolidated from the
date that control ceases. Details of subsidiaries are set out in
Note 35.
The purchase method of accounting is used to account for
the acquisition of subsidiaries by the Group (refer to note 1(e)).
The Group applies a policy of treating transactions with minority
interests as transactions with parties external to the Group.
Disposals of minority interests result in gains and losses for the
Group that are recorded in the income statement. Purchases of
minority interests result in goodwill, being the difference between
any consideration paid and the relevant share acquired of the
carrying value of the identifiable net assets of the subsidiary.
Minority interests in the results and equity of subsidiaries are
shown separately in the consolidated income statement and
balance sheet respectively.
Intercompany transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted
by the Group.
Investments in subsidiaries are accounted for at cost in the
individual financial statements of Grange Resources Limited.
(ii) Joint Ventures
Jointly controlled assets
The proportionate interests in the assets, liabilities and expenses
of a joint venture activity have been incorporated into the financial
statements under the appropriate headings. Details of joint
ventures are set out in Note 36.
Where part of a joint venture interest is farmed out in
consideration of the farm-in party undertaking to incur further
expenditure on behalf of both the farm-in party and the entity in
the joint venture area of interest, exploration expenditure incurred
and carried forward prior to farm out continues to be carried
forward without adjustment. Any cash received in consideration
for farming out part of a joint venture interest is treated as a
reduction in the carrying value of the related mineral property.
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