Reissued on June 12, 2013 to change FVLCTS to FVLCD. No other changes made.
Current economic conditions remain challenging for many energy and mining entities. Concerns over the continuing financial instability in Europe, the tepid US economic recovery and slowing economic growth in China have been contributing to highly volatile market prices for commodities. For months now, commodity prices have weakened and, in mid April, there was a steep decline in the prices of many commodities. This market reaction was accompanied by a major sell off of equity securities of energy and mining companies. These events raise many questions about the recoverability or valuation of assets of these companies. Many companies may need to address these issues in their next interim financial statements.
Impairment of assets for energy and mining companies is covered by a number of different standards depending on the nature of the asset. Some of these standards are complicated, and this can make getting the accounting and disclosures right more of a challenge.
We have compiled some questions and answers on impairment of assets in the current economic conditions for energy and mining companies. These questions and answers provide practical guidance on impairment indicators to look out for, the recognition and measurement of impairments in interim financial statements and what disclosures are required.
The responses to the questions relate to interim financial reporting based on the application of IAS 34: Interim Financial Reporting. The responses may differ if an entity is applying IFRSs other than IAS 34 for the preparation of its interim financial statements.