ASIC has welcomed the decision by Kazakhstan Potash Corporation Limited(KPC) to retrospectively reduce the value of its exploration and evaluation assets by $302 million in its financial report for the half-year ended 30 June 2015.

ASIC had previously made enquiries of KPC regarding the acquisition accounting of the exploration assets in KPC’s 31 December 2014 financial report as part of its financial reporting surveillance program. ASIC raised a number of concerns with KPC including the fair value assessment of the exploration assets acquired.

In its 30 June 2015 financial report KPC has restated its 31 December 2014 comparative figures by:

• reducing the exploration and evaluation asset balances by $302 million by using the share price on the date KPC was re-admitted to the ASX, namely 30 cents per share. In our view, this is a more appropriate fair value for the shares issued as consideration.
• writing back a related deferred tax liability of $48 million.
• reducing a share based payment expense by $57 million by reassessing the fair value of services provided to KPC.

As ASIC has stated previously, companies and those involved in preparing and approving financial reports should continue to focus on asset values.