ALLUP SILICA LIMITED NOTES TO THE FINANCIAL STATEMENTS 45 FINANCIAL REPORT ALLUP SILICA Year Ending 30 June 2023 Note 1: Summary of Significant Accounting Policies (continued) (p) Critical Accounting Judgements and Key Sources of Estimation Uncertainty (cont.) Critical judgements in applying the Group’s Accounting Policies The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the directors have made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in financial statements. (i) Exploration Expenditure Exploration expenditure is capitalised where the Company holds a current tenement. The Company capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of resources or reserves. While there are certain areas of interest from which no reserves have been extracted, the Directors are of a view that such expenditure should not be written off since feasibility studies in such areas have yet to be concluded. At year-end the Directors undertake an impairment review against each tenement in accordance with AASB 6, to ensure the capitalised costs are not impaired. Such capitalised expenditure is carried at the end of the reporting period at $890,366. Key sources of Estimation Uncertainty (i) Share-based Payments The values of amounts recognised in respect of share-based payments have been estimated based on grant date fair value of the options. To estimate the fair value an option model has been used. The are many variable assumptions used as inputs into the model (which have been detailed in Note 12). If any assumptions or estimates were to change this could have a significant effect on the amounts recognised. (q) Earnings per Share Basic earnings per share is calculated as net profit/(loss) attributable to members of the Company, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per shares is calculated as net profit/(loss) attributable to members of the Company, adjusted for: costs of servicing equity (other than dividends) and preference share dividends; the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
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