INSTRUCTIONS - Realview

NOTES TO THEFINANCIAL STATEMENTSFor the year ended 30 June 2009Note 1 Summary of significant accountingpolicies cont.(e) Revenue recognition cont.Revenue is recognised for the major business activitiesas follows:(i) Product salesAmounts are recognised as sales revenue when there hasbeen a transfer of risk to a customer, and:• the product is in a form suitable for delivery and no furtherprocessing is required by, or on behalf of, the Group;• the quantity, quality and selling price of the productcan be determined with reasonable accuracy; and• the product has been despatched to the metals refineryand is no longer under the physical control of the Group,or the metals refinery has formally acknowledged legalownership of the product, including all inherent risks.Gains and losses, including premiums paid or received,in respect of forward sales, options and other deferreddelivery arrangements which hedge anticipated revenuesfrom future production are deferred and included in salesrevenue when the hedged proceeds are received.(ii) Interest incomeInterest income is recognised on a time proportion basisusing the effective interest method.(iii) DividendsDividends are recognised as revenue when the rightto receive payment is established.(iv) Gains on disposal of available-for-salefinancial assetsRevenue is recognised when the risks and rewards ofownership have been transferred, which is usuallyconsidered to occur on settlement.(f) Exploration and evaluation/Mine properties(i) Exploration, evaluation and feasibility expenditureAll exploration and evaluation expenditure incurred up toestablishment of reserves is expensed as incurred. From thepoint in time when reserves are established, exploration andevaluation expenditure is capitalised and carried forwardin the financial statements, in respect of areas of interestfor which the rights of tenure are current and where suchcosts are expected to be recouped through successfuldevelopment and exploitation of the area of interest,or alternatively, by its sale.Exploration and evaluation expenditure consists of anaccumulation of acquisition costs and direct explorationand evaluation costs incurred, together with an allocationof directly related overhead expenditure.Feasibility expenditure represents costs related to thepreparation and completion of a feasibility study to enable adevelopment decision to be made in relation to that area ofinterest. Feasibility expenditures are expensed as incurreduntil a decision has been made to develop the area of interest.Exploration and evaluation assets are assessed for impairmentif (i) sufficient data exists to determine technical feasibilityand commercial viability, and (ii) facts and circumstancessuggest that the carrying amount exceeds the recoverableamount (see impairment policy, Note 1(k)). For the purposeof impairment testing, exploration and evaluation assets areallocated to cash-generating units to which the explorationactivity relates.When an area of interest is abandoned, or the Directorsdetermine it is not commercial, accumulated costs in respectof that area are written off in the period the decision is made.(ii) Mines under constructionMine development expenditure is accumulated separatelyfor each area of interest in which economically recoverablereserves have been identified. This expenditure includesdirect costs of construction, an appropriate allocation ofoverheads and borrowing costs capitalised during construction.Once a development decision has been taken, all past andfuture capitalised exploration, evaluation and feasibilityexpenditure in respect of the area of interest is aggregatedwith the costs of construction and classified under noncurrentassets as mine development.(iii) Mine developmentMine development represents the acquisition cost and/oraccumulated exploration, evaluation and developmentexpenditure in respect of areas of interest in which mininghas commenced.When further development expenditure is incurred inrespect of a mine development after the commencementof production, such expenditure is carried forward as partof the mine development only when substantial futureeconomic benefits are thereby established, otherwise suchexpenditure is classified as part of production and expensedas incurred.Mine development costs are deferred until commercialproduction commences, at which time they are amortisedon a unit-of-production basis over mineable reserves. Thecalculation of amortisation takes into account future costswhich will be incurred to develop all the mineable reserves.Changes to mineable reserves are applied from the beginningof the reporting period and the amortisation charge isadjusted prospectively from the beginning of the period.52