IAS 16, paras 20A, 74A, adoption of amendment ‘Proceeds before intended use’

Anglo American plc – Annual report – 31 December 2022

Industry: mining

39. Accounting policies (extract)

IAS 16 Property, Plant and Equipment: Proceeds before intended use

An amendment to IAS 16 Proceeds before intended use became effective for the Group from 1 January 2022.

The amendment prohibits an entity from deducting from the cost of an item of property, plant and equipment any proceeds received from selling items produced while the entity is preparing the asset for its intended use. The proceeds from selling these items, and the associated costs will be recognised in the income statement. IAS 2 Inventories should be applied in identifying and measuring the cost of these items.

The impact of this transition difference for the year ended 31 December 2021 is not considered material to the Group and hence comparative values have not been restated.

The Group’s Quellaveco copper project is the most significant project impacted by the amendment to IAS 16 during 2022. All production and sales from Quellaveco in 2022 arose before commercial production is achieved, and as a result revenue of $608 million and associated costs of $289 million that would previously have been capitalised against project assets were recognised in the Consolidated income statement. The impact of adopting the amendment did not have a material impact on any other operation.