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Notes to the Financial Statements (cont’d)
For the financial year ended 31 December 2011
2. Summary of significant accounting policies (cont’d)
2.9 Intangible assets (cont’d)
b) Other intangible assets (cont’d)
(i) Mining rights/mining assets
Mining rights/mining assets acquired in a business combination are stated at their fair values as at the date
of acquisition. Following initial recognition, mining rights/mining assets are carried at cost less accumulated
amortisation and impairment losses, if any. The policy for the recognition and measurement of impairment
losses is in accordance with Note 2.14.
Mining rights/mining assets are amortised based on the unit-of-production method so as to write off the mining
rights/mining assets in proportion to the depletion of the estimated economically recoverable ore reserves and
resources. The amortisation period and the amortisation method are reviewed at least at each financial year end.
(ii) Club membership
Club memberships were acquired separately and are amortised on a straight-line basis over the finite useful life.
2.10 Mineral exploration, evaluation and development expenditure
a) Deferred mine exploration and evaluation expenditure
Deferred mine exploration and evaluation expenditure is stated at cost less accumulated amortisation and impairment
losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.14.
Mine exploration and evaluation expenditure incurred in an area of interest is accumulated in respect of each
identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped
through the successful development of the area or where activities in the area have not yet reached a stage that
permit reasonable assessment of the existence of economically recoverable ore reserves and resources.
Accumulated costs in relation to an abandoned area are written off in full to the profit or loss in the year in which the
decision to abandon the area is made.
When production commences, the accumulated cost for the relevant area of interest is amortised based on the unitof-production
method so as to write off the expenditure in proportion to the depletion of the estimated economically
recoverable ore reserves and resources.
A review is carried out annually on the carrying amount of deferred exploration and evaluation expenditures to
determine whether there is any indication of impairment. An impairment loss is recognised as an expense in profit
or loss.
b) Deferred mine development expenditure
Deferred mine development expenditure is stated at cost less accumulated amortisation and impairment losses, if
any. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.14.
Mine development expenditure incurred in connection with development activities in respect of each area of
interest, which includes all activities conducted in the preparation of economically recoverable ore reserves and
resources until commercial production is accumulated in respect of each identifiable area of interest. These costs
are only deferred to the extent that they are expected to be recouped through the successful development of the
area. Mine development expenditure which is considered to provide minimal benefit to future periods is recognised
as an expense in profit or loss.
When production in an area of interest commences, the accumulated cost for the relevant area of interest is
amortised based on the unit-of-production method so as to write off the expenditure in proportion to the depletion
of the estimated economically recoverable ore reserves and resources.
A review is carried out annually on the carrying amount of deferred development expenditure to determine whether
there is any indication of impairment. An impairment loss is recognised as an expense in profit or loss.
MALAYSIA SMELTING CORPORATION (43072-A) • ANNUAL REPORT 2011 91