ANNUAL%20REPORT%202015%20eng

Notes to Consolidated Financial Statements
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(l)
Inventories
Coal inventories are physically measured or estimated and valued at the lower of cost and net realisable
value.
Cost is calculated using the weighted average cost formula and comprises all costs of purchase, an
appropriate portion of fixed and variable overhead costs, including the stripping costs incurred during
the production phase, and other costs incurred in bringing the inventories to their present location and
condition.
Net realisable value is the estimated future sales price of the product the Group expects to realise
when such item is sold or processed, less estimated costs to complete and bring the product to sale.
When coal inventories are sold, the carrying amount of those inventories is recognised as an expense in
the period in which the related revenue is recognised. The amount of any write-down of inventories to
net realisable value and all losses of inventories are recognised as an expense in the period the writedown
or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a
reduction in the amount of inventories recognised as an expense in the period in which the reversal
occurs.
Inventories of ancillary materials, spare parts and small tools used in production are stated at cost less
impairment losses for obsolescence.
(m) Trade and other receivables
Trade and other receivables are initially recognised at fair value and thereafter stated at amortised
cost using the effective interest method, less allowance for impairment of doubtful debts (see Note
2(k) (i)), except where the receivables are interest-free loans made to related parties without any fixed
repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are
stated at cost less allowance for impairment of doubtful debts.
(n)
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs.
Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any
difference between the amount initially recognised and redemption value being recognised in profit or
loss over the period of the borrowings, together with any interest and fees payable, using the effective
interest method.
(o)
Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently stated at amortised
cost unless the effect of discounting would be immaterial, in which case they are stated at cost.
Annual Report 2015
129