2011 Annual Illustrative IFRS Financial Statements - BDO Canada

Precious & Other Metals ExplorationNOTES TO THE FINANCIAL STATEMENTSExpressed in Canadian DollarsFor the year-ended December 31, 2011Reference:IAS 16.6IAS 16.73IAS 16.16IAS 16.30f) Property, Plant and EquipmentRecognition and MeasurementOn initial recognition, property, plant and equipment are valued at cost, being the purchase price anddirectly attributable cost of acquisition or construction required to bring the asset to the location andcondition necessary to be capable of operating in the manner intended by the Company, includingappropriate borrowing costs and the estimated present value of any future unavoidable costs of dismantlingand removing items. The corresponding liability is recognized within provisions.Property, plant and equipment is subsequently measured at cost less accumulated depreciation, less anyaccumulated impairment losses, with the exception of land which is not depreciated.When parts of an item of property, plant and equipment have different useful lives, they are accounted for asseparate items (major components) of property, plant and equipment.Subsequent CostsThe cost of replacing part of an item of property, plant and equipment is recognized in the carrying amountof the item if it is probable that the future economic benefits embodied within the part will flow to theCompany and its cost can be measured reliably. The carrying amount of the replaced part is derecognized.The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss asincurred.Major Maintenance and RepairsSubsequent costs are included in the asset’s carrying amount or recognized as a separate asset, asappropriate, only when it is probable that future economic benefits associated with the item will flow to theCompany and the cost of the item can be measured reliably. All other repairs and maintenance are chargedto profit or loss during the financial year in which they are incurred.Gains and LossesGains and losses on disposal of an item of property, plant and equipment are determined by comparing theproceeds from disposal with the carrying amount, and are recognized net within other income in profit orloss.IAS 16.73IAS 16.51DepreciationDepreciation is recognized in profit or loss and is provided on a straight-line basis over the estimated usefullife of the assets as follows:Furniture and FixturesOffice EquipmentVehiclesField EquipmentStraight line over x YearsStraight line over x YearsStraight line over x YearsStraight line over x YearsDepreciation methods, useful lives and residual values are reviewed at each financial year-end and adjustedif appropriate.PAGE 9 OF 35BDO CANADA LLP