## Note 1. Summary of Significant Accounting Policies (continued) 

## (l) Intangibles  (continued) 

## Impairment of Goodwill 

For the purpose of impairment testing at the end of each reporting period, goodwill recognised in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. 

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. 

An impairment loss is recognised as an expense in the consolidated statement of comprehensive income for the amount by which the asset’s carrying amount exceeds its estimated recoverable amount. 

Any impairment loss recognised for goodwill is not subsequently reversed. 

## (m) Exploration and Evaluation Expenditure 

Expenditure on exploration and evaluation activities is accounted for in accordance with the ‘area of interest’ method of  AASB 6 ‘Exploration for and Evaluation of Mineral Resources’ . Exploration and evaluation expenditure is capitalised at cost, as an intangible, provided the right to tenure of the area of interest is current and either: 

• the exploration and evaluation activities are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or 

• exploration and evaluation activities in the area of interest have not at the end of the reporting period reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. 

Otherwise, exploration and evaluation expenditure is expensed as incurred. 

Accumulated costs in relation to an abandoned area are written off in full in the consolidated statement of comprehensive income during the financial period in which the decision to abandon the area of interest is made. 

As capitalised exploration and evaluation expenditure is not available for use, it is not amortised. 

Cash flows associated with exploration and evaluation expenditure (comprising amounts capitalised) are classified as investing activities in the consolidated statement of cash flows. Whereas, cash flows associated with exploration and evaluation expenditure expensed are classified as operating activities in the consolidated statement of cash flows. 

When the technical feasibility and commercial viability of extracting economically recoverable reserves have been demonstrated, any related capitalised exploration and evaluation expenditure is reclassified as development expenditure in the consolidated statement of financial position. Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment. 

## Farm-out 

The Group does not record any exploration and evaluation expenditure made by a farmee. It also does not recognise any gain or loss on its exploration and evaluation farm-out arrangements but redesignates any exploration and evaluation expenditure previously capitalised in relation to the whole area of interest as relating to the partial interest retained. 

Any cash consideration received on sale or farm-out of an area within an exploration area of interest is offset against the carrying value of the particular area involved. Where the total carrying value of an area of interest has been recouped in this manner, the balance of the proceeds is brought to account in the consolidated statement of comprehensive income as a gain on disposal. 

