DBPapers
DOI: 10.5593/SGEM2016/B53/S21.014

COMPARISON OF INTERNATIONAL AND SLOVAK ACCOUNTING REGULATION FOR STRIPPING COSTS IN THE PRODUCTION PHASE OF A SURFACE MINE

R.Tusan
Wednesday 7 September 2016 by Libadmin2016

References: 16th International Multidisciplinary Scientific GeoConference SGEM 2016, www.sgem.org, SGEM2016 Conference Proceedings, ISBN 978-619-7105-67-4 / ISSN 1314-2704, June 28 - July 6, 2016, Book5 Vol. 3, 107-114 pp

ABSTRACT
The International Accounting Standards Board (IASB) in October 2011 published the new International Financial Reporting Interpretations Committee (IFRIC) 20: Stripping Costs in the Production Phase of a Surface Mine. The reason for this interpretation was a different approach by the entities in accounting for costs associated with the removal of the overlying rock in the production phase of surface mines. Some entities accounted for such costs as expenses related to the production, while other entities considered these expenses for the cost elements of a surface mines value, which is gradually charged with the life cycle of the mine. Costs associated with the removal of the overlying rock is that part of the production, with which will be removed a layer of soil covering natural resources -ore, coal. This layer of soil may not be a waste in any case, as it may contain a portion of the natural resource. This natural source may or may not reach the desired economic quality. In both cases, however, it may be involved in the formation of inventory or contributing to the release of deposit with higher content of natural resources that will be mined in future periods. The costs will be accounted for as noncurrent assets, as they contribute to the release of deposit and it is probable that the economic benefit of mining will flow to the entity and the entity can identify the extraction element on which was the access improved. Interpretation IFRIC 20 is primarily focused on reporting of the costs associated with the removal of the overlying rock layers during the production phase of the property and on the initial and subsequent valuation of such assets. Slovak accounting legislation does not distinguish between the specific costs associated with the removal of the overlying rock layers during the production phase. Two methods are used in the paper - the analysis of the present state and the comparison of these two approaches of accounting. In conclusion, recommendations are formulated to Slovak accounting legislation to ensure that the accounting will give a true and fair view of the facts constituting its matter.

Keywords: stripping costs, surface mine, stripping activity asset