2000 Annual Report - Heron Resources Limited

5.0 Continued
Financial Statements
d) Investments
Investments are brought to account at cost or at Directors’ valuation. The carrying amount of investments is reviewed
annually by Directors to ensure it is not in excess of the recoverable amount of these investments.
e) Depreciation
Depreciation is calculated on a straight line or diminishing value basis to write off the net cost of each item of property, plant
and equipment over its expected useful life. Rates of depreciation are 15% for motor vehicles, 15% to 100% for plant &
equipment and 20% to 36% for office furniture and equipment.
f) Interests in Joint Ventures
The economic entity’s share of the assets, liabilities, revenue and expenses of joint ventures is included in the appropriate
items of the balance sheet and the profit and loss account.
Details of the joint ventures are set out in Note 21.
g) Employee Entitlements
Liabilities for wages and salaries, annual leave and sick leave are recognised and are measured as the amount unpaid at
the reporting date at current pay rates in respect of employees’ service up to that date.
h) Cash
For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and money market investments
readily convertible to cash within two working days, net of outstanding bank overdrafts.
i) Acquisition of Assets
The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets are
acquired. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to the
acquisition. Where shares are issued in an acquisition, the value of the shares is determined by reference to the fair value
of the assets acquired, including goodwill where applicable.
Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure,
development properties or mine properties based on the stage of development reached at the date of acquisition. Assets
acquired may also include mineral reserves, mineral resources and unexplored and unevaluated acreage.
Where settlement of any part of a cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of acquisition. The discount rate used is the rate at which a similar borrowing could be obtained
under comparable terms and conditions.
A liability for restructuring costs is recognised as at the date of acquisition of an entity or part thereof when there is a
demonstrable commitment to a restructuring of the acquired entity and a reliable estimate of the amount of the liability can
be made.
j) Recoverable Amount of Non-Current Assets
The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from
its continued use and subsequent disposal.
Where the carrying amount of a non-current asset is greater than its recoverable amount the asset is revalued to its
recoverable amount. Where the net cash inflows are derived from a group of assets working together, recoverable amount
is determined on the basis of the relevant group of assets. To the extent that a revaluation decrement reverses a revaluation
increment previously credited to, and still included in the balance of the asset revaluation reserve, the decrement is debited
directly to that reserve. Otherwise the decrement is recognised as an expense in the profit and loss account.
The expected net cash flows included in determining recoverable amounts of non-current assets are discounted to their
present values using a market-determined, risk adjusted discount rate.
Heron Resources NL Annual Report 2000
page 49