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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
102 Independence Group NL
Notes to the consolidated financial statements
30 June 2015
2 Summary of significant accounting policies (continued)
(l) Derivatives and hedging activities (continued)
The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts
with similar maturity profiles. The fair value of commodity contracts is determined by reference to market values for
similar instruments.
For the purposes of hedge accounting, hedges are classified as cash flow hedges where they hedge exposure to
variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a
forecast transaction.
In relation to cash flow hedges (ie forward foreign currency contracts and commodity contracts) to hedge firm
commitments which meet the conditions for hedge accounting, the portion of the gain or loss on the hedging instrument
that is determined to be an effective hedge is recognised directly in other comprehensive income and the ineffective
portion is recognised in the profit or loss. If the hedge accounting conditions are not met, movements in fair value are
recognised in the profit or loss.
Amounts accumulated in equity are recycled in the statement of profit or loss and other comprehensive income in the
periods when the hedged item will affect profit or loss, for instance when the forecast sale that is hedged takes place.
The gain or loss relating to the effective portion of forward foreign exchange contracts and forward commodity contracts
is recognised in the profit or loss within sales.
(m) Investments and other financial assets
The Group classifies its financial assets in the following categories:
• financial assets at fair value through profit or loss;
• loans and receivables; and
• available-for-sale financial assets.
The classification depends on the purpose for which the investments were acquired. Management determines the
classification of its investments at initial recognition.
Financial assets are initially recognised at cost, being the fair value of the consideration given and including acquisition
charges associated with the investment.
After initial recognition, financial assets which are classified as held for trading are measured at fair value. Gains or
losses on investments held for trading are recognised in the profit or loss. The Group has investments in listed entities
which are considered to be tradeable by the Board and which the Company expects to sell for cash in the future.
For investments carried at amortised cost, gains and losses are recognised in the statement of profit or loss and other
comprehensive income when the investments are de-recognised or impaired, as well as through the amortisation
process.
Fair value of quoted investments is based on current bid prices. If the market for a financial asset is not active (eg.
unlisted securities), a valuation technique is applied and if this is deemed unsuitable, they are held at initial cost.
(n) Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. It also
includes the direct cost of bringing the asset to the location and condition necessary for first use and the estimated
future cost of rehabilitation, where applicable. The assets are subsequently measured at cost less accumulated
depreciation and any accumulated impairment losses.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they
are incurred.
Land is not depreciated. Depreciation on other assets is calculated using either units-of-production or straight-line
depreciation as follows:
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