Accounting and Financial Reporting for Alacer Gold Corp

Running head: ACCOUNTING AND FINANCIAL REPORTING
Accounting and financial reporting
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1ACCOUNTING AND FINANCIAL REPORTING
The main purpose of the report is to highlight various items and their recognition and
treatment from the financial reports of Alacer Gold Corp. Various items from the financial
report those will be taken into consideration for the purpose of analyses are property, plant
and equipment, leases, revenues, intangible assets and provisions. Alacer Gold Corp is the
intermediate gold mining entity and is engaged in exploration and development of the
mineral deposits in Turkey and in mining activities. The entity is further engaged in
exploration, production and acquisition of gold in Turkey. The company is the low cost
producer for gold with 80% interest in Copper Gold Mine that is operated by Anagold
Madencilik Sanayi ve Ticaret and balance 20% is owned by Lidya Madencilik Sanayi ve
Ticaret. Different segments of the entity include Turkish Corporate, business segments and
other segments (Alacergold.com 2018).
One item listed under the non-current assets of the company is mineral properties
and equipment. The amount for the said item has been increased from $ 435,358 thousands to
$ 738,202 thousands over the time of 31st December 2016 to 31st December 2017. This item is
recorded at historical cost that includes the evaluation, development and acquisition of the
mining properties and is recorded in the financial statement at historical cost reduced by
depletion. Historical cost further includes the expenses directly attributable to the acquisition
and the subsequent expenses for evaluating and developing the mineral resources and
reserves. Further, at the time of acquisition under the stage of exploration estimated fair value
for acquiring the exploration license is determined. Fair value of exploration license is
recognized as exploration asset (Christensen and Nikolaev 2013).
On the contrary, instead of historical valuation the assets could have been valued on
market based value or fair value. Fair value will enable the company to estimate the value at
which the asset can be sold at the market. Under fair value approach the fair is the amount at

2ACCOUNTING AND FINANCIAL REPORTING
which the asset can be purchased or sold in the open market in present circumstance (Bamber
and McMeeking 2016).
Intangible asset is the asset that is non-physical by nature. For instance, brand
recognition, goodwill and intellectual properties like trademark, copyrights and patents are
considered as intangible asset. Intangible assets are segregated as definite or indefinite. For
instance, brand name will be considered as indefinite as the brand name will continue to exist
as long as the company will exist. Conversely, patents will be considered as definite as the
patent is acquired for certain period of time. Intangible assets can be acquired or created.
However, the acquired intangible assets are only recognized under the financial reports of the
company (Zambon 2017). Intangible assets can be value using various approaches like cost
approach, market approach and income approach. Under cost approach 2 general
considerations are used – (i) historical cost for creating the asset and (ii) estimated time and
cost required for creating equivalent asset or replacing the asset. Market based approach
applies the market based indications for value. It can involve the transactions like buying,
selling, licensing, franchising the asset. These activities are generally bundled with the other
deals. Under the income approach future projected economic benefits or the discounted cash
flows are determined for the associated risks and time with the present value (Gipper,
Lombardi and Skinner 2013). However, for the year ended 31st December 2017 the company
did not recognized any intangible assets in its financial reports.
Item listed under the Provisions, contingent assets and contingent liabilities of the
company is provision for asset retirement obligation. The amount for the said item has been
increased from $ 27,316 thousands to $ 37,938 thousands over the time of 31st December
2016 to 31st December 2017. The company recognizes the provisions when it has present
constructive or legal obligation owing to the past events and it is likely that the resource
outflow will take place for settling the obligation and the amount of obligation can be