The IFRS Interpretations Committee received a request in 2009 for guidance on how to account for stripping costs in the production phase of a surface mine. The Committee took the issue onto its agenda in January 2010, and in August 2010 it published for public comment a Draft Interpretation Stripping Costs in the Production Phase of a Surface Mine. The Committee re-deliberated the previous conclusions reached in light of the comment letters received.

The Committee discussed whether to move forward with the project and tentatively agreed that it should continue with developing this interpretation since there appears to be current diversity in practice, and further diversity in practice is anticipated with additional jurisdictions adopting or expected to adopt IFRS.

It was decided that the concept of "stripping campaign" be abandoned because many thought it would be too difficult to define and could lead to a rules-based interpretation. Instead, the Committee agreed that guidance be developed by the staff to assist in applying the existing cost capitalisation principle in IAS 16. The Committee asked the staff to develop this guidance, along with indicators that would assist in determining whether costs are incurred during the development phase or production phase.

The decision was taken by the Committee to leave it up to the judgement of the entity as to whether the stripping cost asset should be accounted for under IAS 16 or IAS 38. In terms of depreciation/amortisation, the Committee tentatively agreed that the specific identification approach is still valid, but that the guidance should not be too prescriptive and should leave room for judgement based on the identification of the type of ore that's likely to be extracted.

The Committee decided that the drafted illustrative example should be removed, prior to finalising the Interpretation. The Committee agreed to delay discussing impairment testing in respect of stripping costs and transition until a later meeting.