IFRS bulletin: Straight away - August 2010

What is the issue?

On August 26, 2010, the IFRIC published a Draft Interpretation (DI) on stripping costs that may have significant day one impacts for IFRS mining companies. The interpretation sets out guidance on the accounting for waste removal (stripping) costs in the production phase of a mine. The challenge in accounting for stripping costs in the production phase is identifying and allocating the benefits and the costs of stripping activity across different reporting periods. There is some diversity in practice as there is no specific guidance under IFRS. Some entities expense stripping costs as a cost of production and some entities capitalise some or all stripping costs on different calculation bases (e.g. life-of-mine ratio).

The DI addresses the following issues: 

  • Is the definition of an asset met?
  • When should the asset be recognised?
  • How should the asset be measured initially?
  • How should the asset be measured subsequently?

Am I affected?

What do I need to do?

Download the IFRS bulletin to learn the answers to these important questions. The IFRIC is requesting comments on the DI by 30 November 2010.