Compliance of Evolution Mining Limited with AASB Valuation Standards

Running head: BUSINESS ACCOUNTING
Business Accounting
Name of the Student
Name of the University
Author’s Note

1BUSINESS ACCOUNTING
Introduction
In Australia, it is the prime obligation on the ASX listed companies to comply with the
principles as well as standard of Australian Accounting Standards Board (AASB) Conceptual
Framework for the purpose of their financial reporting (aasb.gov.au 2019). This essay determines
the compliance of an ASX listed company that is Evolution Mining Limited with certain
valuation standards of AASB like AASB 101 Presentation of Financial Statements and AASB
102 Inventory. In addition, this essay also considers the determination of the costing method used
by the chosen company along with the impact of other costing methods on the same company.
Measurement of Inventory
It is needed for the ASX listed companies to adhere to the principles of AASB 102
Inventories for the valuation of inventories. As per AASB 102, the companies are needed to
measure their business inventories at the lower of cost and net realizable value. As per the same
standard, at the time of the sale of the inventories, the companies are needed to recognize the
carrying amount of those inventories as an expense in that particular period of the recognized
revenue (aasb.gov.au 2019). The presence of this same aspect can be seen in Evolution Mining
Limited as the company has measured their inventories in accordance with AASB 102. By
complying with the measurement requirement of AASB 102, Evolution Mining Limited has
ensured the measurement of their inventories such as ore stockpile, metal in circuit, gold ore,
refined gold bullion and concentrate at lower of cost and net realizable value. At the same time,
the company has also adhered to the Net Realizable Value requirements of AASB 102 for the
determination as well as valuation of the net realizable value of their inventories. This indicates

2BUSINESS ACCOUNTING
that Evolution Mining Limited has measured and valued their inventories as per the relevant
accounting standards (evolutionmining.com.au 2019).
Inventory System
It can be seen from the 2018 Annual Report of Evolution Mining Limited that the
company has adopted a specific inventory system for their inventories. Under this particular
inventory system, the aim of the company is to measure their inventories such as ore stockpile,
metal in circuit, gold ore, refined gold bullion and concentrate physically. It implies that the
company has not employed any computerized system for the measurement or estimation of their
inventories. Moreover, the company has employed a system of regular and ongoing review for
ascertaining the extent o surplus items; and there is a provision for any kind of potential loss on
the sale of the inventories. The company considers the stockpiles as non-current assets in case
they are not processed within 12 months (evolutionmining.com.au 2019).
There are certain advantages for Evolution Mining Limited in using this inventory
system. First, the physical measurement or estimation of the inventories brings accuracy in the
inventory system by minimizing errors in the process. Second, the presence of the review system
provides information to the company about the incoming and outgoing of inventories that is
helpful in the planning process. Lastly, the valuation of inventory in the lower of cost and net
reliable value reduces the inefficiency in the inventory valuation process
(evolutionmining.com.au 2019).