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2011 Annual Illustrative IFRS Financial Statements - BDO Canada

2011 Annual Illustrative IFRS Financial Statements - BDO Canada

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Precious & Other Metals ExplorationNOTES TO THE FINANCIAL STATEMENTSExpressed in Canadian DollarsFor the year-ended December 31, <strong>2011</strong>Reference:IAS 36.12g) Impairment of Non-<strong>Financial</strong> AssetsImpairment tests on intangible assets with indefinite useful economic lives are undertaken annually at thefinancial year-end. Other non-financial assets, including exploration and evaluation assets are subject toimpairment tests whenever events or changes in circumstances indicate that their carrying amount may notbe recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher ofvalue in use and fair value less costs to sell, the asset is written down accordingly.Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test iscarried out on the asset's cash-generating unit, which is the lowest group of assets in which the asset belongsfor which there are separately identifiable cash inflows that are largely independent of the cash inflows fromother assets. The Company has one cash-generating unit for which impairment testing is performed.An impairment loss is charged to profit or loss, except to the extent they reverse gains previously recognizedin accumulated other comprehensive loss/income.IAS 39.9 h) <strong>Financial</strong> Instruments<strong>Financial</strong> Assets<strong>Financial</strong> assets are classified into one of the following categories based on the purpose for which the assetwas acquired. All transactions related to financial instruments are recorded on a trade date basis. TheCompany's accounting policy for each category is as follows:<strong>IFRS</strong> 7.21IAS 39.43IAS 39.46<strong>IFRS</strong> 7.21B5IAS 39.43IAS 39.44IAS 39.45IAS 39.46Loans and ReceivablesThese assets are non-derivative financial assets resulting from the delivery of cash or other assets by a lenderto a borrower in return for a promise to repay on a specified date or dates, or on demand. They are initiallyrecognized at fair value plus transaction costs that are directly attributable to their acquisition or issue andsubsequently carried at amortized cost, using the effective interest rate method, less any impairment losses.Amortized cost is calculated taking into account any discount or premium on acquisition and includes feesthat are an integral part of the effective interest rate and transaction costs. Gains and losses are recognizedin profit or loss when the loans and receivables are derecognized or impaired, as well as through theamortization process.Available-For-Sale InvestmentsNon-derivative financial assets that do not meet the definition of loans and receivables are classified asavailable-for-sale and comprise principally the Company's strategic investments in entities not qualifying assubsidiaries or associates. Available-for-sale investments are carried at fair value with changes in fair valuerecognized in other comprehensive loss/income. Where there is a significant or prolonged decline in the fairvalue of an available-for-sale financial asset (which constitutes objective evidence of impairment), the fullamount of the impairment, including any amount previously recognized in other comprehensive loss/income,is recognized in profit or loss. If there is no quoted market price in an active market and fair value cannot bereadily determined, available-for-sale investments are carried at cost.On sale or impairment, the cumulative amount recognized in other comprehensive loss/income is reclassifiedfrom accumulated other comprehensive loss/income to profit or loss.<strong>IFRS</strong> 7 B5IAS 39.58Impairment on <strong>Financial</strong> AssetsAt each reporting date the Company assesses whether there is any objective evidence that a financial asset ora group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired,if, and only if, there is objective evidence of impairment as a result of one or more events that has occurredafter the initial recognition of the asset and that event has an impact on the estimated future cash flows ofthe financial asset or the group of financial assets.PAGE 10 OF 35<strong>BDO</strong> CANADA LLP

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