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Whitehaven Coal Limited : Annual Report 2013
119 Whitehaven Coal Limited Annual Report 2013 Notes to the Financial Statements 30 June 2013 Cash ow hedges Cash ow hedges are hedges of the consolidated entity's exposure to variability in cash ows that is attributable to a particular risk associated with forecast sales and purchases that could a ect pro t or loss. Changes in the fair value of the hedging instrument designated as a cash ow hedge are recognised directly in equity to the extent that the hedge is e ective. To the extent that the hedge is ine ective, changes in fair value are recognised in pro t or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged transaction (coal sales and asset purchases) when the forecast transaction occurs. The consolidated entity tests each of the designated cash ow hedges for e ectiveness at each balance date, both retrospectively and prospectively, by using the dollar o set method. If the testing falls within the 80:125 range, the hedge is considered to be highly e ective and continues to be designated as a cash ow hedge. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if it no longer meets the criteria for hedge accounting (due to it being ine ective), then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains in equity until the forecast transaction occurs. Economic hedges Derivatives which do not qualify for hedge accounting are measured at fair value with changes in fair value recognised in pro t or loss. h) Investments and other nancial assets Financial assets in the scope of AASB 139 are categorised as either nancial assets at fair value through pro t and loss, loans and receivables, held-to-maturity investments, or available-for-sale nancial assets. Financial assets are recognised initially at fair value, plus, for assets not at fair value through pro t or loss, any directly attributable transaction costs. Recognition and derecognition Regular way purchases and sales of nancial assets are accounted for at trade date, i.e., the date that the consolidated entity commits itself to purchase or sell the asset. Financial assets are derecognised if the consolidated entity's contractual rights to the cash ows from the nancial assets expire or if the consolidated entity transfers the nancial asset to another party without retaining control or substantially all risks and rewards of the asset. i) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Cost also may include transfers from equity of any gain or loss on qualifying cash ow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Borrowing costs related to the acquisition or construction of qualifying assets are capitalised as part of the cost of the asset. Mining property and development assets include costs transferred from exploration and evaluation assets once technical feasibility and commercial viability of an area of interest are demonstrable and subsequent costs to develop the mine to production phase. When parts of an item of property, plant and equipment have di erent useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within 'other income'. Assets are deemed to be commissioned when they are capable of operating in the manner intended by management, and amortisation starts from this date.
Annual Report 2012