Accounting for stripping costs in the production phase of a mine
Board approval of IFRIC 20
IFRIC 20 provides guidance on the accounting for the costs of stripping activity (waste removal) in the production phase of surface mining when two benefits accrue to the entity from the stripping activity: usable ore that can be used to produce inventory (inventory asset) and improved access to further quantities of material (stripping activity asset) that will be mined in future periods.
The Board suggested some editorial changes in relation to clarification of the definition of a component and that IFRIC 20 covers ore and other types of minerals obtained from surface mining. The Board tentatively decided that the Interpretation did not need to be re-exposed and approved IFRIC 20, subject to its final review of drafting changes.
The Board also tentatively decided that an entity should apply IFRIC 20 for annual periods beginning on or after 1 January 2013 with earlier application permitted. IFRIC 20 will be applied to costs incurred on or after the beginning of the earliest period presented, and provides transition guidance for pre-existing asset balances that resulted from stripping activity prior to that date.