ANNUAL REPORT 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued  (l)  Derivatives and hedging activities (continued) (ii)  Cash flow hedges (continued) (iii)  Derivatives that do not qualify for hedge accounting (m)  Property, plant and equipment When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,  any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is  ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss  that was reported in equity is immediately transferred to profit or loss. Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does  not qualify for hedge accounting are recognised immediately in the statement of comprehensive income. Land and buildings and all other property, plant and equipment are stated at historical cost less accumulated depreciation and  impairment losses (note 1(g)). Historical cost includes expenditure that is directly attributable to the acquisition of the items. 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 consolidated entity and the cost of the item can be  measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the  statement of comprehensive income during the financial period in which they are incurred. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost net of  their residual values, over their estimated useful lives as follows: The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An  assets’ carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its  estimated recoverable amount (note 1(g)). Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in profit  or loss. When re-valued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to  retained earnings. Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration  and evaluation asset is tested for impairment and the balance is then reclassified as ‘assets under construction’, and disclosed  as a component of property, plant and equipment.  All subsequent expenditure incurred in the construction of a mine by or on behalf of, the Group is accumulated separately for  each area of interest in which economically recoverable reserves have been identified. This expenditure includes net direct costs  of construction and borrowing costs capitalised during construction. On completion of development, all assets included in ‘assets  under construction’ are reclassified as either ‘plant and equipment’ or ‘mine properties’. 53 Assets under construction Item  Estimated Useful Life (years) Plant and Machinery  3-10 Buildings  20 Field Equipment  5 Furniture and Fittings  8 Motor Vehicles 5 Office Equipment  8