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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)
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2.16 Impairment of financial assets (cont’d)
(b) Available-for-sale (“AFS”) financial assets
2.17 Inventories
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and
the disappearance of an active trading market are considerations to determine whether there is objective evidence
that investment securities classified as available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any
principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in
profit or loss is transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent
periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.
For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase
in the fair value of the investment can be objectively related to an event occurring after the recognition of the
impairment loss in profit or loss.
Inventories are stated at the lower of cost and net realisable value.
Cost of trading inventory of refined tin metal is determined on a first-in first-out basis. Cost of inventories of tin-inconcentrates
and tin-in-process which have matching sales contract for refined tin metal from tin smelting operations,
are stated at the value of such contract less allowance for conversion. This value is consistent with cost, as it is the
practice of tin smelting operations of the Company to buy tin-in-concentrates and sell refined tin metal on a back to
back price basis.
Absorption costing is used in the mining operations to assign costs to tin inventories using the weighted average cost
method which includes both variable and fixed overhead cost components. The cost of purchased tin-in-concentrates
prior to processing comprises cost of purchase.
Cost of other inventories comprising stores, spares, fuels and saleable by-products is determined using the weighted
average cost method. Production cost is not allocated to by-products as it is not material.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
2.18 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid
investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of
changes in value.
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