30 June 2014 Notes to the Financial Statements For personal use only Notes to the  Financial  Statements Mineral Resources Limited Annual Report 2014  59 DEVELOPMENT STRIPPING INVESTMENTS INTEREST IN JOINT VENTURES IMPAIRMENT OF NON-FINANCIAL ASSETS TRADE AND OTHER PAYABLES BORROWINGS Development stripping costs arise from the removal of overburden and other mine waste materials removed  during the development of a mine site in order to access the mineral deposit. Costs directly attributable to  development stripping activities costs, inclusive of an allocation of relevant overhead expenditure, are initially  capitalised to Exploration and evaluation expenditure. Capitalisation of development stripping costs ceases at the  time that saleable material begins to be extracted from the mine. On completion of development, all capitalised  development stripping included in Exploration and Evaluation is transferred to Mine Development expenditures.  Production stripping commences at the time that saleable materials begin to be extracted from the mine and,  under normal circumstances, continue throughout the life of the mine. Costs of production stripping are charged  to the profit or loss as operating costs when the ratio of waste material to ore extracted for an area of interest is  expected to be constant throughout its estimated life. When the ratio of waste to ore is not expected to be constant, production stripping costs are accounted for as follows:  Investments in controlled entities are carried at cost.  The Consolidated Entity’s share of the assets, liabilities, revenue and expenses of jointly controlled assets has  been included in the appropriate line items of the consolidated financial statements.  The Consolidated Entity’s interests in joint venture entities are brought to account operation using the  proportionate consolidation method. Where the Consolidated Entity contributes assets to the joint venture, or if the Consolidated Entity purchases  assets from the joint venture, only the portion of the gain or loss that is not attributable to the Consolidated  Entity’s share of the joint venture shall be recognised. The Consolidated Entity however will recognise the full  amount of any loss when the contribution results in a reduction in the net realisable value of current assets or an  impairment loss.  Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are  tested annually for impairment, or more frequently if events or changes in circumstances indicate that they  might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in  circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for  the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in- use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate  specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent  cash flows are grouped together to form a cash-generating unit. These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of  the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and  are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction  costs. They are subsequently measured at amortised cost using the effective interest method. Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting  date, the loans or borrowings are classified as non-current. •  All costs are initially charged to profit or loss and classified as operating costs •  When the current ratio of waste to ore is greater than the estimated life-of-mine ratio, a portion of the stripping  costs (inclusive of an allocation of relevant overhead expenditure) is capitalised to Mine Development expenditure •  The amount of production stripping costs capitalised or charged in a financial year is determined so that  the stripping expense for the financial year reflects the estimated life-of-mine ratio. The stripping costs are  amortised against the profit or loss to the extent that, in subsequent periods, the current period ratio falls  short of the life-of-mine-ratio. Changes to the estimated life-of-mine ratio are accounted for prospectively  from the date of the change.