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SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended
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Jun. 30, 2019
Significant Accounting Policies [Abstract] |
Significant Accounting Policies | SIGNIFICANT ACCOUNTING POLICIES A) Statement of Compliance These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). These interim financial statements should be read in conjunction with Barrick’s most recently issued Annual Report which includes information necessary or useful to understanding the Company’s business and financial statement presentation. In particular, the Company’s significant accounting policies were presented in Note 2 of the Annual Consolidated Financial Statements for the year ended December 31, 2018 ("2018 Annual Financial Statements"), and have been consistently applied in the preparation of these interim financial statements, except as otherwise noted in Note 2B. These condensed interim consolidated financial statements were authorized for issuance by the Board of Directors on August 9, 2019. B) New Accounting Standards Effective in 2019 Impact of Adoption of IFRS 16 Leases We have adopted the requirements of IFRS 16 Leases (“IFRS 16”) as of January 1, 2019. IFRS 16 specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all major leases where a lessee has the right to control the use of an identified asset. We elected to apply IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17 Leases and IFRIC 4: Determining Whether an Arrangement Contains a Lease. The reclassifications and the adjustments arising from the new leasing rules are therefore recognized on January 1, 2019. The details of accounting policy changes and the quantitative impact of these changes are described below. Accounting policy changes Through 2018, assets acquired via a finance lease were recorded as an asset with a corresponding liability at an amount equal to the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment was allocated between the liability and finance cost using the effective interest method, whereby a constant rate of interest expense is recognized on the balance of the liability outstanding. The interest element of the lease was charged to the consolidated statements of income as a finance cost. Property, plant and equipment assets acquired under finance leases were depreciated over the shorter of the useful life of the asset and the lease term. All other leases were classified as operating leases. Operating lease payments were recognized as an operating cost in the consolidated statements of income on a straight-line basis over the lease term. From January 1, 2019, leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
• | fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• | variable lease payments that are based on an index or a rate;
• | amounts expected to be payable by the lessee under residual value guarantees;
• | the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
• | payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost comprising the following:
• | the amount of the initial measurement of lease liability;
• | any lease payments made at or before the commencement date less any lease incentives received;
• | any initial direct costs; and
• | restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets are generally comprised of IT-equipment and small items of office furniture. Impact on consolidated financial statements On adoption of IFRS 16, we recognized lease liabilities in relation to leases which had previously been classified as operating leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the weighted average incremental borrowing rate as of January 1, 2019 of 5.83%. For leases previously classified as finance leases the entity recognized the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date of initial application. The measurement principles of IFRS 16 are applied after the date of initial application. The following table reconciles the Company’s operating lease obligations as at December 31, 2018 as previously disclosed in the Company’s 2018 Annual Financial Statements, to the lease obligations recognized on initial application of IFRS 16 at January 1, 2019:
Barrick operating lease commitments disclosed as at December 31, 2018 | $ | 167 |
Add: embedded service contracts not previously assessed as a lease | 38 |
(Less): contracts reassessed as service agreements | (130 | )
(Less): short-term leases recognized on a straight-line basis as expense | (6 | )
(Less): low-value leases recognized on a straight-line basis as expense | (1 | )
(Less): discounting using the lessee’s incremental borrowing rate of at January 1, 2019 | (4 | )
Discounted leases recognized as at January 1, 2019 | $ | 64 |
Add: finance lease liabilities recognized as at December 31, 2018 | 19 |
Add: leases acquired as part of the merger with Randgold on January 1, 2019 | 28 |
Discounted lease liability recognized as at January 1, 2019 | $ | 111 |
Of which are: |
Current lease liabilities | 37 |
Non-current lease liabilities | $ | 74 |
The recognized right-of-use assets relate to the following types of assets:
| June 30, 2019 |  | January 1, 2019 |
Buildings, Plant & Equipment | $ | 66 |  | $ | 69 |
Underground mobile equipment | 8 |  | 7 |
Light vehicles and other mobile equipment | 7 |  | 9 |
Total right-of-use assets | $ | 81 |  | $ | 85 |
Right-of use assets were measured at the amount equal to the lease liability, except for onerous contracts. The change in accounting policy affected the following items in the balance sheet on January 1, 2019:
• | property, plant and equipment - increase by $85 million
• | deferred income tax assets - $nil.
• | debt - increase by $92 million
There was no net impact on deficit on January 1, 2019. Consolidated net income decreased by $nil and $1 million, respectively, for the three and six months ended June 30, 2019 as a result of the adoption of IFRS 16. Practical expedients applied In applying IFRS 16 for the first time, we have used the following practical expedients permitted by the standard:
• | the accounting for operating leases with a remaining lease term of less than 12 months as at January 1, 2019 as short-term leases;
• | the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application;
• | the adjustment of the right-of-use assets at the date of initial application by the amount of any provision for onerous contracts recognized immediately before the date of initial application; and
• | to not separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component.

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