Page 71 - ar2012

31 December 2012
NOTESTO FINANCIAL STATEMENTS
GEO ENERGY RESOURCES LIMITED | Annual Report 2012 67
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are
included in proft or loss for the period. Exchange differences arising on the retranslation of non-monetary items
carried at fair value are included in proft or loss for the period except for differences arising on the retranslation
of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For
such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive
income.
For the purpose of presenting consolidated fnancial statements and company’s fnancial statements, the
assets and liabilities of the Group’s foreign operations (including comparatives) are expressed in United States
dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including
comparatives) are translated at the average exchange rates for the period, unless exchange rates fuctuated
signifcantly during that period, in which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a
separate component of equity under the header of foreign currency translation reserve.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities
(including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings
and other currency instruments designated as hedges of such investments are recognised in other comprehensive
income and accumulated in a separate component of equity under the header of translation reserve.
SEGMENT REPORTING – An operating segment is a component of the Group that engages in business activities
from which it may earn revenue and incur expenses, including revenue and expenses that relate to transactions
with any of the Group’s other components.
Operating segments are reported in a manner consistent with the internal reporting provided to members of
management and the chief operating decision makers who are responsible for allocating resources and assessing
performance of the operating segments.
4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies which are described in Note 3 to the fnancial statements,
management is required to make judgements, estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are
based on historical experience and other factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and future periods.
Critical judgements in applying the Group’s accounting policies
The following are the critical judgements, apart from those involving estimation (see below), that management has
made in the process of applying the Group’s accounting policies and that have the most signifcant effect on the
amounts recognised in the fnancial statements.
Capitalisation of deferred mining evaluation assets
Evaluation expenditures are capitalised in the consolidated statement of fnancial position, in respect of areas of
interest for which the rights of tenure are current and where such costs are expected to be recouped or exploration
and/or evaluation activities in the area have not yet reached a stage which permits a reasonable assessment
of the existence of economically recoverable reserves. The carrying amounts of the Group’s deferred mining
evaluation assets are disclosed in Note 13 to the fnancial statements.