The interpretation provides guidance on how to account for overburden waste stripping costs in the production phase of a surface mine. Stripping activity related to inventory produced is accounted for in accordance with IAS 2, Inventories. Stripping activity that improves access to ore is accounted for as an addition to or enhancement of an existing asset.
Based on our analysis, we have identified components of our ore bodies to be phases, pits or sub-pits depending on the ore body being analyzed. These components align with how we view each mine and plan our mining activities. Previously, we recorded stripping activity assets relating to major expansions only. Under IFRIC 20, we recognize stripping activity assets when the following three criteria are met:
-- it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the entity;-- the entity can identify the component of the ore body for which access has been improved; and-- the costs relating to the stripping activity associated with that component can be measured reliably.
Stripping activity assets capitalized under IFRIC 20 are classified as mineral properties and mine development costs within property, plant and equipment, which is consistent with the classification of the asset these costs relate to.
These assets are amortized on a units-of-production basis over the remaining proven and probable reserves of the respective components.
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. These items were partially offset by the amortization of stripping activity assets on a units-of-production basis in the respective periods. Inventories were adjusted to capitalize production stripping costs. The depreciation of stripping activity assets is included in the cost of inventories. The tables in Note 11(d) below outline the adjustments to our financial statements for all comparative periods presented.
The adoption of IFRIC 20 has significantly increased our capitalization of production stripping costs as 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.
b) Pronouncements Affecting Our Financial Statement Presentation or Disclosures
The adoption of the following new and amended IFRS pronouncements will result in enhanced financial statement disclosures in our interim or annual consolidated financial statements or a change in financial statement presentation. These pronouncements did not affect our financial results.
i) Disclosures of interest in other entities
We adopted IFRS 12, Disclosures of Interests in Other Entities ("IFRS 12") on January 1, 2013. IFRS 12 outlines the disclosure requirements for interests in subsidiaries and other entities to enable users to evaluate the risks associated with interests in other entities and the effects of those interests on an entity's financial position, financial performance and cash flows.
The requirements of IFRS 12 relate to disclosures only and are applicable for the first annual period after adoption. IFRS 12 does not require the disclosures to be included for any period presented that precedes the first annual period for which IFRS 12 is applied. Accordingly, we will include additional disclosures about interests in other entities in our annual consolidated financial statements for the year ended December 31, 2013. This will include a non-controlling interest's financial statement note and include summarized financial information for significant associates and joint arrangements.