notes to and forming part of the financial statements  for the year ended 30 June 2004 (continued) Leased Assets (d) Restoration Costs (e) Mine Closure Interest-Bearing Liabilities (a) Areas in Exploration and Evaluation Payables Provisions (b) Areas in Development (c) Areas in Production Contributed Equity Income Recognition RESOLUTE MINING LIMITED 2004 ANNUAL REPORT 42 Revenue from production of gold is recognised when the product is ready for dispatch to a gold refinery. Revenue from the sale of assets is recognised when control of the goods has passed to the buyer and interest revenue is recognised when control of the right to receive the interest payment is received. The net carrying value of each mine property is reviewed regularly and, to the extent to which this value exceeds its recoverable amount, that excess is fully provided against in the financial year in which this is determined. Areas in production represent the accumulation of all exploration, evaluation and development expenditure incurred by or on behalf of the entity in relation to areas of interest in which mining of a mineral resource has commenced. Amortisation of costs is provided on the unit-of-production method, with separate calculations being made for each mineral resource. The unit-of-production basis results in an amortisation charge proportional to the depletion of the economically recoverable mineral resources.  Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. Issued and paid up capital is recognised at the fair value of the consideration received by the Company. A provision for dividends is not recognised as a liability unless the dividends are declared, determined or publicly recommended on or before the reporting date. Provisions are recognised when the consolidated entity has a legal, equitable or constructive obligation to make a future sacrifice of economic benefits to other entities as a result of past transactions or other past events, it is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the amount of the obligation. Areas in development represent the costs incurred in preparing mines for production. The costs are carried forward to the extent that these costs are expected to be recouped through the successful exploitation of the Company’s Mining Leases. Costs carried forward in respect of an area of interest that is abandoned are written off in the year in which the decision to abandon is made. Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accruals basis. Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity. Exploration and evaluation costs related to an area of interest are carried forward only when rights of tenure to the area of interest are current and provided that one of the following conditions is met: All loans are measured at the principal amount. Also, refer to “Borrowing Costs” on the next page. Finance lease liability is determined in accordance with the requirements of AASB 1008 “Leases”. Mine closure costs are provided for once it is imminent that a mine’s life is complete and it is probable that additional costs will be incurred in relation to the closure, which can be reliably measured. The consolidated entity follows the area of interest method of accounting for exploration properties. Mineral Exploration and Development Costs Restoration and rehabilitation activity performed as part of the ongoing operations is expensed as it is incurred. The amount of restoration obligations required at the cessation of a particular mine-site are provided for gradually over the mine’s life of production. The restoration obligation recognised includes the costs of reclamation and waste site closure and are estimated on the basis of estimates of future costs on an undiscounted basis. Changes in estimates are dealt with on a prospective basis. Operating lease payments where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased items, are included in the determination of profit from ordinary activities in equal instalments over the lease term. Finance leases, which effectively transfer to the consolidated entity all of the risks and benefits incidental to ownership of the leased item, are capitalised at the present value of the minimum lease payments, disclosed as leased property, plant and equipment, and amortised over the period the consolidated entity is expected to benefit from the use of the leased assets. Lease payments are allocated between interest expense and reduction in the lease liability.  Costs of restoration work are provided for and treated as production costs. The provision for restoration costs is reassessed at balance date. - exploration and/or evaluation activities in the area of interest have not yet reached a state which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area are continuing. - such costs are expected to be recouped through successful development and exploitation of the area of interest, or alternatively by its sale; or