2011 Annual Report (3 April 2012) - Grange Resources

2011 ANNUAL REPORT
55
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends either to
settle on a net basis, or to realise the asset and settle the liability
simultaneously.
Grange Resources Limited and its wholly-owned Australian
controlled entities have implemented the tax consolidation
legislation. On 6 January 2011, the Group merged its two
separate tax consolidated group’s and Grange Resources
Limited became the head entity of the merged tax consolidated
group. As a consequence, Grange Resources Limited and its
subsidiaries are taxed as a single entity and the deferred tax
assets and liabilities of the Group are set off in the consolidated
financial statements.
(m) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST except:
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when GST incurred on a purchase of goods and services is
not recoverable from the taxation authority, in which case the
GST is recognised as part of the cost of acquisition of the
asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount
of GST included.
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables in
the balance sheet.
Cash flows are included in the Statement of Cash Flows on a
gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or
payable to, the taxation authority, are presented as operating
cash flows.
Commitments and contingencies are presented net of the amount
of GST recoverable from, or payable to, the taxation authority.
(n) Property, plant and equipment
Land and buildings and plant and equipment are measured
at cost less, where applicable, any accumulated depreciation,
amortisation or impairment in value. Cost includes expenditure
that is directly attributable to the acquisition of the item. In the
event that all or part of the purchase consideration is deferred,
cost is determined by discounting the amounts payable in the
future to their present value as at the date of acquisition.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as
a separate asset is derecognised when replaced. All other repairs
and maintenance are charged to the income statement during the
reporting period in which they are incurred.
Land is not depreciated. Assets under construction are measured
at cost and are not depreciated until they are ready and available
for use. Depreciation on assets is calculated using either a
straight-line or diminishing value method to allocate the cost,net
of their residual values, over the estimated useful lives or the life
of the mine, whichever is shorter. Leasehold improvements and
certain leased plant and equipment are depreciated over the
shorter lease term.
Other non-mine plant and equipment typically has the following
estimated useful lives:
Buildings
Plant and Equipment
Computer Equipment
10 years
4 to 8 years
3 to 5 years
The assets residual values, useful lives and amortisation methods
are reviewed and adjusted if appropriate, at each financial period
end.
An item of property, plant and equipment is derecognised upon
disposal or when no further economic benefits are expected from
its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the income statement
in the period the asset is derecognised.
(o) Exploration and evaluation
Exploration and evaluation expenditure comprises costs which
are directly attributable to:
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research and analysing exploration data
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conducting geological studies, exploratory drilling and
sampling
examining and testing extraction and treatment methods
compiling pre-feasibility and definitive feasibility studies
Exploration and evaluation expenditure also includes the costs
incurred in acquiring rights, the entry premiums paid to gain
access to areas of interest and amounts payable to third parties
to acquire interests in existing projects.
DirectorS’ Report
Financial Statements
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