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It is registered

Ministry of Justice

Russian Federation

On December 12, 2012 No. 26099

ORDER OF THE MINISTRY OF FINANCE OF THE RUSSIAN FEDERATION

of October 31, 2012 No. 143n

About enforcement of documents of International accounting standards in the territory of the Russian Federation

According to the Regulations on recognition of International accounting standards and Explanations of International accounting standards for application in the territory of the Russian Federation approved by the order of the Government of the Russian Federation of February 25, 2011 N 107 (The Russian Federation Code, 2011, N 10, Art. 1385; 2012, N 6, to the Art. 680), in coordination with the Federal Service for Financial Markets and the Central bank of the Russian Federation I order:

1. Enact in the territory of the Russian Federation:

1) the Explanation of KRMFO (IFRIC) 20 of "Costs for overburden works at operational phase of the field developed by open method" (appendix N 1);

2) the Document of International accounting standards "The loans granted by the state (Amendments to the International accounting standard (IFRS) 1)" (appendix N 2);

3) the Document of International accounting standards "Disclosure of information - offset of financial assets and financial liabilities (The amendment to the International accounting standard (IFRS) 7)" (appendix N 3);

4) Document of International accounting standards "Consolidated financial statements, joint activities and disclosure of information on participation in other companies: Management by transitional provisions (Amendments to the International accounting standard (IFRS) 10, to the International accounting standard (IFRS) 11 and the International accounting standard (IFRS) 12)" (appendix N 4);

5) Document of International accounting standards "Annual enhancements of International accounting standards, period of 2009 - 2011" (appendix N 5).

2. Determine that the documents of International accounting standards specified in Item 1 of this order become effective in the territory of the Russian Federation: for voluntary application by the organizations - from the date of their official publication; for obligatory application by the organizations - in the terms determined in these documents.

Minister

A. G. Siluanov

It is approved

Central Bank of the Russian Federation Chairman of the Central Bank of the Russian Federation 30.10.2012

 

 

S. M. Ignatyev

Federal Service for Financial Markets Head of the Federal Service for Financial Markets 31.10.2012

 

D.V.Pankin

Appendix No. 1

to the order of the Ministry of Finance of the Russian Federation of October 31, 2012 No. 143n

Explanation of KRMFO (IFRIC) 20 of "Costs for overburden works at operational phase of the field developed by open method"

References

- IFRS (IAS) 1 "Accounts presentation";

- IFRS (IAS) 2 "Inventories";

- IFRS (IAS) 16 "Fixed assets";

- IFRS (IAS) 38 "Intangible assets".

Initial information

1. In case of development of mineral deposits to the organizations opened by method can be required to remove dead rocks ("overburden breeds") to get access to inventories of minerals. These activities for removal of dead rocks are known as "overburden works".

2. At stage of development of the field (prior to production) costs for overburden works are, as a rule, capitalized as a part of depreciable original cost of the construction, preparatory and mountain and capital works relating to the field. After the beginning of operation of the field these capitalized costs will be amortized on systematic basis, usually using method of cost depletion is pro rata to production volume.

3. The mining organization can continue activities for removal of overburden breeds and incur costs for overburden works at field operational phase.

4. The breed removed when carrying out overburden works at production stage not necessarily represents only slag breeds; often this combination of ore and dead rocks. The ore ratio to dead rock can vary from so low that production of ore is economically inexpedient, to so high that production will be profitable. Removal of breeds with low ratio of ore to dead rocks can give quantity of suitable material which can be used for production of inventories. During removal of these breeds access to deeper layers of breeds in which the ore ratio to dead rocks is higher can be also got. Thus, the organization can take double benefit from carrying out overburden works: production of ore, suitable for use, which can be used for production of inventories, and the improved access to additional amounts of minerals which can be extracted in future periods.

5. This explanation considers when and how it is necessary to consider separately two specified benefits received from carrying out overburden works and also properly to carry out initial and subsequent assessment of these benefits.

Scope of application

6. This explanation is applied to costs for removal of dead rocks which arise in case of open-cast minings at field operational phase ("costs for overburden works at production stage").

Questions

7. In this explanation the following questions are considered:

(a) recognition of costs for overburden works of the operational period as asset;

(b) initial assessment of the asset connected with overburden works;

(c) subsequent assessment of the asset connected with overburden works.

Consensus

Recognition of costs for overburden works of the operational period as asset

8. If benefit from carrying out overburden works is implemented in the form of the made inventories, the organization shall consider costs for implementation of these works according to the principles of IFRS (IAS) 2 "Inventories". If benefit represents the improved access to ore body, the organization recognizes these costs as the non-current asset on condition of respect for criteria of Item 9 lower. Within this explanation this non-current asset is designated as "the asset connected with overburden works".

9. The organization shall recognize the asset connected with overburden works, in only case when, when all following criteria are observed:

(a) it is obviously possible that the future economic benefit connected with carrying out overburden works (the improved access to ore body) will arrive in the organization;

(b) the organization can identify that component of ore body to which access was improved;

(c) the costs connected with carrying out overburden works which belong to this component can be reliably estimated.

10. The asset connected with overburden works shall be considered or as increase in the existing asset, or as its improvement. In other words, the asset connected with overburden works is considered as part of the existing asset.

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