Refer
to the 2009 year-end financial statements and accompanying notes of Eastern
Platinum Limited (Eastplats) that have been reproduced at the end of this
volume and on the book companion site. In Eastplats’s notes, the company refers
to accounting standards that have been retrospectively applied, standards that
have been prospectively applied, and standards that have been issued but are
not yet effective.
Instructions
(a)
Review note 25 from the financial statements that appear on the book companion
site, and explain how the IFRS standards have been adopted and retrospectively
applied. Indicate and explain the following:
1.
On what date did the company adopt IFRS?
2.
What exemptions to retrospective restatement were applied?
3.
What items required restatement and what was their impact on the income
statement for 2008, and the statement of financial position at January 1, 2008,
and December 31, 2008? Consider putting the solution in table format.
(b)
What disclosure did the company provide on standards that were issued, but were
not effective?
(a) (i) Note 25 outlines the company’s adoption of IFRS. The company has applied IFRS retrospectively
from January 1, 2008, except for exemptions allowed under IFRS1.
(ii)
The exemptions applied were as follows:
·
Business
combinations – the standard IFRS 3 related to business combinations has been
prospectively applied, effective January 1, 2008.
·
Cumulative
translation differences – the company has applied the exemption from IAS 21
which allows the company to eliminate all cumulative translation differences to
retained earnings. This will result in
no impact on future disposals of these foreign subsidiaries related to
translation gains or losses arising prior to January 1, 2008.
·
Share
based payments – Eastplats decided to apply the exemption that allowed them not
to have to apply IFRS 2 to share based awards granted and vested prior to
January 1, 2008.
·
Consolidated
financial statements – Since Eastplats did not retrospectively adopt IFRS 3 on
business combinations, the company may also apply the exemption of IAS 27
related to consolidation. Consequently,
IAS 27 is applied prospectively.
·
Borrowing
costs – The company has decided to apply IAS 23 on borrowing costs
prospectively, effective January 1, 2009.
(iii) As indicated in note 25 (h) to (o), the
company’s assets and liabilities at January 1, 2008, December 31, 2008 and
revenue and expenses for 2008, have been impacted as follows:
|
In
thousands of $USs
|
January
1, 2008
Balances
|
December
31, 2008
Balances
|
2008
profit or loss
|
|
(h) revenue – due to present value of revenue
|
(597) reduction in receivables
|
(125) reduction in receivables
|
1,517 reduction in revenue; 1,863 increase in interest
income
|
|
(i) property plant and equipment due to environmental rehabilitation
provision
|
1,929 increase in PP&E
|
277,566 reduction in PP&E - cumulative with impairment and
environmental rehabilitation provision
|
63 increase in depreciation
|
|
(j) share-based payments vesting and forfeiture revisions
|
|
336 increase in equity settled employee benefits
|
335 increase in share based payments
|
|
(k) environmental rehabilitation provision adjusted for
changes in the discount rate
|
1,929 increase in PP&E;
3,335 increase in environmental rehabilitation provision
|
277,566 reduction in PP&E - cumulative with impairment and
environmental rehabilitation provision;
2,752 increase in environmental rehabilitation provision
|
174 increase in finance costs
|
|
(l) classification of all deferred tax accounts as
non-current
|
1,646 reclassification of deferred tax liabilities from current to non-current
|
1,178 reclassification of deferred tax liabilities from current to
non-current;
82,798 (81,620 + 1178)
increase in deferred tax liabilities due to impairment
|
|
|
In thousands of $USs
|
January 1, 2008
Balances
|
December 31, 2008
Balances
|
2008 profit or loss
|
|
(m) OCI adjustments related to cumulative translations
adjustments
|
|
3,994 reduction in currency translation adjustment
27,475, reduction in Increase in other comprehensive loss
related to translation gains and losses
|
|
|
(n) Impairment tests for mineral properties
|
|
277,566 reduction in PP&E - cumulative with impairment and
environmental rehabilitation provision
|
297,285 increase in impairment losses;
71,490 increase in deferred tax recovery
|
|
(o)_ some presentation changes
|
748 increase in current portion of finance lease
liabilities; reclassification of
finance leases for 5,057 and loans for 3,322 from capital lease
non-current liabilities ;
|
7,396 increase
exchange differences on translating non-controlling interests;
247 increase in current loans
|
|
(b) For standards issued, but not yet effective, Eastplats listed these
in Note 3 (x), noting the standard number and title and its effective
date. The company disclosed that it did
not early adopt any these standards and it is currently assessing the impact on
its financial statements.
