2012 Annual Report (2 April 2013) - Grange Resources

2012 ANNUAL REPORT
47
PAGE
Notes to the Financial Statements
NOTE 1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation
of the consolidated financial statements are set out below.
These policies have been consistently applied for all the periods
presented, unless otherwise stated.
The financial statements are for the consolidated entity consisting
of Grange Resources Limited and its subsidiaries.
(a) Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001.
Compliance with IFRS
The consolidated financial statements of the Grange Resources
Limited group also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).
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 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 Limited as
at 31 December 2012 and the results of all subsidiaries for the
year 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 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 36.
The acquisition method of accounting is used to account for
business combinations 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 37.
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.
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.