IASB Clarifies Mining Waste Accounting
The International Accounting Standards Board (IASB) has issued an interpretation clarifying the requirement for accounting for stripping costs in the production phase of a surface mine.
It was developed by the IFRS Interpretations Committee of the IASB.
The committee was asked to clarify when and how to account for stripping costs (the process of removing waste from a surface mine in order to gain access to mineral ore deposits) to address diversity in practice.
The interpretation clarifies when production stripping should lead to the recognition of an asset and how that asset should be measured, both initially and in subsequent periods.
It is effective for annual periods beginning on or after 1 January 2013 with earlier application permitted.
The IFRIC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine, is available for e1FRS subscribers from eifrs.ifrs.org.
Research by KPMG’s International Standards Group on the most recent financial statements of 26 mining companies revealed that 15 disclosed their accounting policy for production stripping costs. Of these 15 companies, just over a third expensed such costs as incurred for some or all of their mines.