Pronouncements Affecting Our Financial Results
The adoption of the following new and amended IFRS pronouncements has resulted in adjustments to how we determine our current and previously reported figures as described below.
Production stripping costs
IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine ("IFRIC 20") provides guidance on how to account for overburden waste stripping costs in the production phase of a surface mine. Stripping activities that improve access to ore are considered to be an addition or enhancement of an existing asset and accordingly these costs should be capitalized.
The adoption of IFRIC 20 resulted in an increase in the capitalization of stripping activity assets on our consolidated balance sheet and an increase in our profit and earnings per share as costs that would have been expensed under our previous accounting policy are now being capitalized and amortized on a units-of-production basis in the subsequent periods. Inventories were adjusted to capitalize production stripping costs and the depreciation of stripping activity assets is included in the cost of inventories.
The adoption of IFRIC 20 has significantly increased our capitalization of production stripping costs compared to our previous accounting policy. During the quarter ended March 31, 2013, we capitalized $223 million of stripping activity assets, primarily at our coal operations. We recorded depreciation expense on stripping activity assets of $69 million during the quarter ended March 31, 2013. We have described the effect of IFRIC 20 on our profit and business unit results throughout this management's discussion and analysis.
This new pronouncement has no effect on our cash balance, our total cash flow (other than the presentation in our cash flow statement) or how we operate our mines.
Please refer to Note 11(a)(ii) to our condensed interim consolidated financial statements for the three months ended March 31, 2013 for more details on this pronouncement.
IAS 19, Employee Benefits ("IAS 19"), has amendments related to defined benefit pension plans that eliminate the option to defer certain actuarial gains and losses on the balance sheet. The amendments also require any remeasurement gains or losses, including actuarial gains and losses, to be recognized immediately and presented in other comprehensive income, eliminating the option to recognize and present these amounts through the income statement. The amendments to IAS 19 also require one discount rate be applied to the net defined benefit asset or liability for the purposes of determining the interest element of the defined benefit cost and require the recognition of unvested past service cost awards into profit immediately. There is also a requirement to change the presentation of finance income and finance expense to present both as a net finance expense (income) amount in the consolidated financial statements. Additional disclosures are required to present more information about the characteristics, amounts recognized and risks related to defined benefit plans.
The adoption of the amendments to IAS 19 did not have a significant effect on our results for the period ended March 31, 2013 and we will incorporate the amended disclosure requirements for IAS 19 in our annual consolidated financial statements as at December 31, 2013.
Please refer to Note 11(a)(i) to our condensed interim consolidated financial statements for the three months ended March 31, 2013 for more details on this pronouncement.
Most Popular Stories
- Twitter Coming to Phones Without Internet
- Entravision Initiates Quarterly Cash Dividend
- NASA Fellowships, Scholarships Bring Diversity to Workforce
- Dish Network Leads 2013 Top 50 Advertisers List
- Warner Bros. Unleashes 'Hobbit: Desolation of Smaug' Merchandise
- Shanghai Smog Forces Factory Shutdowns
- Amanda Bynes Enrolls in California's FIDM
- How to Arm Yourself Against CryptoLocker Virus
- Networks Vie for U.S. Hispanic TV Viewers
- Ad Counts Rise in 2013 for Hispanic Magazines