Unformatted text preview: iod will not exceed one year from the
If the assets acquired are not a business, the transaction is accounted for as an asset acquisition.
Business acquisitions are accounted for using the acquisition method whereby acquired assets and liabilities are
recorded at fair value as of the date of acquisition with the excess of the acquisition amount over such fair value
being recorded as goodwill and allocated to CGUs. CGUs are the smallest identifiable group of assets, liabilities
and associated goodwill that generate cash inflows that are largely independent of the cash inflows from other
assets or groups of assets. Each individual mineral property that is an operating or development stage mine is
typically a CGU for goodwill impairment testing purposes.
Goodwill arises principally because of the following factors: (1) the going concern value of the Co mpany’s
capacity to sustain and grow by replacing and augmenting mineral reserves through completely new discoveries;
(2) the ability to capture buyer-specific synergies arising upon a transaction; (3) the optionality (real option value
associated with the portfolio of acquired mines as well as each individual mine) to develop additional higher-cost
mineral reserves, to intensify efforts to develop the more promising acquired properties and to reduce efforts at
developing the less promising acquired properties in the future (this optionality may result from changes in the
overall economics of an individual mine or a portfolio of mines, largely driven by changes in the gold price); and
(4) the requirement to record a deferred tax liability for the difference between the assigned values and the tax
bases of the assets acquired and liabilities assumed in a business combination.
On an annual basis, as at December 31, and at any other time if events or changes in circumstances indicate that
the recoverable amount of a CGU has been reduced below its carrying amount, the carrying amount of the CGU
is evaluated for potential impairment. If the carrying amount of the CGU exceeds its recoverable amount, an
impairment is considered to exist and an impairment loss is recognized to reduce the carrying...
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This document was uploaded on 03/30/2014.
- Spring '14