Notes to the Financial Statements 70 The head entity recognises the assumed current  tax amounts as current tax liabilities or assets,  adding to its own current tax amounts, since  they are also due to or from the same taxation  authority. The current tax liabilities or assets are  equivalent to the tax balances generated by  external transactions entered into by the tax- consolidation group. The amounts receivable or payable under the tax  funding agreement are due upon receipt of the  funding advice from the head entity, which is  issued as soon as practicable after the end of  each financial year. The head entity may also  require payment of interim funding amounts to assist with its obligations to pay tax  instalments. The members of the tax-consolidation group  have also entered into a tax sharing agreement.  The tax sharing agreement provides for the  determination of the allocation of income tax  liabilities between the entities should the head  entity default on its tax payment obligations. No amounts have been recognised in the consol- idated financial statements in respect of this  agreement as payment of any amounts under  the tax sharing agreement is considered remote. Assets are tested 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. The recoverable amount is  the higher of an asset’s fair value less costs to sell  and value in use. For the purposes of assessing  impairment, assets are grouped at the lowest  levels for which there are separately identifiable  cash inflows which are largely independent of the  cash inflows from other assets or groups of  assets (cash-generating units). Non-financial  assets other than goodwill that suffered impair- ment are reviewed for possible reversal of the  impairment at each reporting date. Leases of property, plant and equipment where  the Group, as lessee, has substantially all the  risks and rewards of ownership are classified as  finance leases. Finance leases are capitalised at  the lease’s inception at the fair value of the  leased property or, if lower, the present value of the minimum lease payments. The corre- sponding rental obligations, net of finance  charges, are included in other short-term and  long-term payables. Each lease payment is  allocated between the liability and finance cost.  The finance cost is charged to the profit or loss  over the lease period so as to produce a con- stant periodic rate of interest on the remaining  balance of the liability for each period. The property, plant and equipment acquired  under finance leases is depreciated over the  asset’s useful life or over the shorter of the  asset’s useful life and the lease term if there is  no reasonable certainty that the Group will  obtain ownership at the end of the lease term. Leases in which a significant portion of the risks  and rewards of ownership are not transferred to  the Group as lessee are classified as operating  leases. Payments made under operating leases  (net of any incentives received from the lessor)  are charged to the profit or loss on a straight- line basis over the period of the lease.  The amount of the impairment loss is recognised  in the statement of comprehensive income  Collectability of trade and other receivables is  reviewed on an ongoing basis. Debts which are  known to be uncollectible are written off by  reducing the carrying amount directly. An allow- ance account is used when there is objective  evidence that the Group will not be able to collect  all amounts due according to the original terms  of the receivables. Significant financial difficulties  of the debtor, probability that the debtor will  enter bankruptcy or financial reorganisation, and  default or delinquency in payments more than 60  days overdue are considered indicators that the  trade and other receivable is impaired. The  amount of the impairment allowance is the  difference between the asset’s carrying amount  and the present value of estimated future cash  flows, discounted at the original effective  interest rate. Cash flows relating to short-term  receivables are not discounted if the effect of  discounting is immaterial. The Group initially recognises loans and receiva- bles and deposits on the date that they are  originated. All other financial assets (including  assets designated at fair value through profit or  loss) are recognised initially on the trade date at  The Group classifies its investments and other  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. The Group determines the classifica- tion of its investments at initial recognition and,  in the case of assets classified as held-to-matu- rity, re-evaluates this designation at each  reporting date. Trade and other receivables are recognised initially  at fair value and subsequently measured at amor- tised cost using the effective interest method,  less provision for impairment. Receivables are due  for settlement no more than 90 days from the  date of recognition.  Cash and cash equivalents includes cash on  hand, deposits held at call with financial institu- tions, other short-term, highly liquid invest- ments with original maturities of three months  or less that are readily convertible to known  amounts of cash and which are subject to an  insignificant risk of changes in value, and bank  overdrafts. Bank overdrafts are shown within  borrowings in current liabilities in the statement  of financial position. within other expenses. When a trade and other  receivable for which an impairment allowance  had been recognised becomes uncollectible in a  subsequent period, it is written off against the  allowance account. Subsequent recoveries of  amounts previously written off are credited  against other expenses in the statement of  comprehensive income. Raw materials and stores, work in progress and  finished goods, including gold bullion, are stated  at the lower of cost and net realisable value.  Cost comprises direct materials, direct labour  and an appropriate proportion of variable and  fixed overhead expenditure the latter being  allocated on the basis of normal operating  capacity. Costs are assigned to individual items  of inventory on the basis of weighted average  costs. Costs of purchased inventory are deter- mined after deducting rebates and discounts.  Net realisable value is the estimated selling price  in the ordinary course of business less the  estimated costs of completion and the esti- mated costs necessary to make the sale. Stockpiles represent ore that has been extracted  and is available for further processing. If there is  significant uncertainty as to whether the stock- piled ore will be processed it is expensed as  incurred. Where the future processing of this  ore can be predicted with confidence, e.g.  because it exceeds the mine’s cut-off grade, it is valued at the lower of cost and net realisable  value. If the ore will not be processed within the  12 months after the reporting date it is included  within non-current assets. Work in progress  inventory includes ore stockpiles and other  partly processed material. Quantities are  assessed primarily through surveys and assays,  and truck counts. www.kingsgate.com.au e . Leases h .  Trade and other receivables g .  Cash and cash equivalents f .  Impairment of assets i . Inventories j .  Non-derivative financial assets Classification and recognition