Annual Report 2011 - QuamIR

Notes to the Consolidated Financial StatementsFor the year ended 31 March 20113. Significant Accounting Policies (continued)Impairment of tangible and intangible assets other than goodwill and explorationand evaluation assets (continued)If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carryingamount, the carrying amount of the asset (or the cash-generating unit) is reduced to its recoverableamount. An impairment loss is recognized immediately in profit or loss.Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generatingunit) is increased to the revised estimate of its recoverable amount, but so that the increased carryingamount does not exceed the carrying amount that would have been determined had no impairment lossbeen recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment lossis recognized immediately in profit or loss.Cash and cash equivalentsCash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highlyliquid investments with original maturities of three months or less, and bank overdrafts (if any).InventoriesInventories are stated at the lower of cost and net realizable value. Costs, which comprises all costs ofpurchase and, where applicable, cost of conversion and other costs that have been incurred in bringingthe inventories to their present location and condition, is calculated using the weighted average method.Net realizable value represents the estimated selling price in the ordinary course of business less theestimated costs of completion and the estimated costs necessary to make the sale.ProvisionsProvisions are recognized when the Group has a present obligation (legal or constructive) as a resultof a past event, it is probable that the Group will be required to settle the obligation, and a reliableestimate can be made of the amount of the obligation.The amount recognized as a provision is the best estimate of the consideration required to settle thepresent obligation at the end of the reporting period, taking into account the risks and uncertaintiessurrounding the obligation. When a provision is measured using the cash flows estimated to settle thepresent obligation, its carrying amount is the present value of those cash flows (where the effect of thetime value of money is material).When some or all of the economic benefits required to settle a provision are expected to be recoveredfrom a third party, a receivable is recognized as an asset if it is virtually certain that reimbursementwill be received and the amount of the receivable can be measured reliably.Sino Prosper State Gold Resources Holdings Limited62