NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.18 INVENTORIES
Inventories are stated at the lower of cost and net realisable value.
Cost of trading inventory of refined tin metal is determined on a first-in first-out basis. Cost of inventories of tin-in-
concentrates and tin-in-process which have matching sales contract for refined tin metal from tin smelting operations,
are stated at the value of such contract less allowance for conversion. This value is consistent with cost, as it is the
practice of tin smelting operations of the subsidiary to buy tin-in-concentrates and sell refined tin metal on a back to back
price basis.
Absorption costing is used in the mining operations to assign costs to tin inventories using the weighted average cost
method which includes both variable and fixed overhead cost components. The cost of purchased tin-in-concentrates
prior to processing comprises cost of purchase.
Cost of other inventories comprising stores, spares, fuels, coal and saleable by-products is determined on the weighted
average cost method. Production cost is not allocated to by-products as it is not material.
Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of
inventories to the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion
and the estimated costs necessary to make the sale.
2.19 TRADE AND OTHER RECEIVABLES
Trade and other receivables, include amounts due from subsidiaries, associates, related companies and loans to related
companies. When recognised initially, they are measured at fair value. Subsequent to initial recognition, the receivables
are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in
profit or loss when the receivables are de-recognised or impaired, and through the amortisation process.
Trade and other receivables are recognised and carried at original invoice amounts less allowances for any uncollectible
amounts. Allowance is made when there is objective evidence that the Group will not be able to collect the debts. Bad
debts are written off when identified.
2.20 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank and on hand, short-term deposits that are readily convertible to cash
and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral
part of the Group’s cash management.
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THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
