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Net realizable value is the estimated selling price in the
ordinary course of business, less the estimated costs of
completion and necessary selling expenses. The Company
estimates the net realizable value of its inventories at
least quarterly and adjusts the carrying amount of these
inventories as necessary.
Cost of inventories includes the transfer from other
comprehensive income of gains and losses on qualifying
cash flow hedges in respect of purchases of raw
materials.
(j) Deferred stripping costs
Within the Company’s mining operations, advanced
stripping costs incurred during the production stage of
operations are recognized in prepaid inventory using
the specific identification approach. This methodology is
based on the variability of stripping costs over the course
of a stripping campaign. The ability to strip the mine is
largely seasonal. These amounts are included in prepaid
expenses when the costs are directly attributable to a
specific section of ore body that becomes accessible as a
result of the stripping campaign. Amortization of
the stripping costs into cost of goods sold occurs as the
ore body, to which the stripping has been allocated,
is processed.
(k) Impairment
(i) Financial assets
A financial asset is considered to be impaired if objective
evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that
asset. Financial assets are assessed collectively in groups
that share similar credit risk characteristics.
An impairment loss in respect of a financial asset
measured at amortized cost is calculated as the
difference between its carrying amount and the present
value of the estimated future cash flows discounted at the
original effective interest rate. All impairment losses are
recognized in profit or loss.
An impairment loss is reversed if the reversal can
be related objectively to an event occurring after the
impairment loss was recognized. For financial assets
measured at amortized cost, the reversal is recognized in
profit or loss.
(ii) Non-financial assets
The carrying amounts of the Company’s non-financial
assets, other than inventories and deferred tax assets,
are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount
is estimated.
84 Notes to Consolidated Financial Statements
For goodwill and intangible assets that have indefinite
lives or that are not yet available for use, the recoverable
amount is estimated at each reporting date.
An impairment loss is recognized if the carrying amount
of an asset or its cash-generating unit exceeds its
recoverable amount. A cash-generating unit is the
smallest identifiable asset group that generates cash
flows that largely are independent from other assets and
groups. Impairment losses are recognized in profit or
loss. Impairment losses recognized in respect of cashgenerating
units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to
reduce the carrying amount of the other assets in the unit
(group of units) on a pro rata basis.
The recoverable amount of an asset or cash-generating
unit or group of cash-generating units is the greater of its
value in use and its fair value less costs to sell. In testing
goodwill for impairment, the value in use is determined
by the Company for the cash-generating unit or group
of cash-generating units to which the goodwill has been
assigned. However if tangible assets with a definite
remaining useful life have to be tested for impairment
and the value in use is below the corresponding carrying
amount, a fair value less costs to sell methodology is
utilized. Fair value differs from value in use. Fair value
reflects the knowledge and estimates of knowledgeable,
willing buyers and sellers. In contrast, value in use
reflects the entity’s estimates, including the effects
of factors that may be specific to the entity and not
applicable to entities in general. Thus, in assessing value
in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that
reflects current market assessment of the time value of
money and the risks specific to the asset.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, impairment losses recognized
in prior periods are assessed at each reporting date
for any indications that the loss has decreased or no
longer exists. An impairment loss is reversed if there
has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no
impairment loss had been recognized.
(iii) Associates and joint ventures
After application of the equity method, the Company
determines whether it is necessary to recognize an
additional impairment loss on the Company’s investment
in its associates and joint ventures. The Company
determines at each reporting date whether there is any
objective evidence that an investment in any associate or