40 ANNUAL REPORT 2012 substantially modifed such an exchange or modifcation is treated as a derecognition of the original liability and the recognition of a new liability Any loss on the derecognition of the original liability is recognized in proft or loss 46 IMPAIRMENT OF FINANCIAL ASSETS The Company assesses at each balance sheet date whether there is objective evidence that a fnancial asset or group of fnancial assets is impaired Financial assets carried at amortized cost For fnancial assets carried at amortized cost the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash fows excluding future credit losses that have not been incurred discounted at the fnancial assets original effective interest rate ie the effective interest rate computed at initial recognition Objective evidence of impairment of fnancial assets carried at amortized cost exists if the counterparty is experiencing signifcant fnancial diffculty there is a breach of contract concessions are granted to the counterparty that would not normally be granted or it is probable the counterparty will enter into bankruptcy or a fnancial reorganization If in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized the previously recognized impairment loss is reversed Any subsequent reversal of an impairment loss is recognized in proft or loss to the extent the carrying value of the asset does not exceed its amortized cost at the reversal date Availableforsale fnancial assets Objective evidence of impairment of equity investments classifed as availableforsale would be a signifcant or prolonged decline in the fair value of the security below its cost Reversals of impairment in respect of equity instruments classifed as availableforsale are recognized in other comprehensive income For debt securities the Company uses the criteria referred to under fnancial assets carried at amortized cost above Reversals of impairment losses on debt instruments are made through proft or loss if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognized in proft or loss Assets carried at cost If there is objective evidence that an impairment loss has occurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash fows discounted at the current market rate of return for a similar fnancial asset and is recognized in proft or loss for the period Reversals of impairment losses on assets carried at cost are not permitted 47 INVENTORIES Inventories are recorded at the lower of cost and net realizable value with the cost of materials and supplies determined on a frstin frstout basis and the cost of aggregate inventories determined at weighted average cost The cost of fnished goods and work in progress comprises design costs raw materials direct labour other direct costs and related production overheads based on normal operating capacity Inventories are written down to net realizable value NRV if their NRV is less than their carrying amount at the reporting date If the NRV amount subsequently increases the amount of the write down is reversed and recognized as a reduction in materials expense The NRV of inventory is its estimated selling price in the ordinary course of business less applicable selling costs 48 PROPERTY PLANT AND EQUIPMENT Property plant and equipment are recorded at historical cost less accumulated depreciation and accumulated impairment losses if any The cost of property plant and equipment includes the purchase price and the directly attributable costs of acquisition or construction costs required to bring the asset to the location and condition necessary for the asset to be capable of operating in the manner intended by management Property plant and equipment under fnance lease where the Company has substantially all the risks and rewards of ownership are recorded at the lower of the fair value of the leased item or the present value of the minimum lease payments at the inception of the lease In subsequent periods property plant and equipment are stated at cost less accumulated depreciation and any impairment in value with the exception of land and assets under construction which are not depreciated but are stated at cost less any impairment in value Depreciation is recorded to allocate the cost less estimated residual values of property plant and equipment over their estimated useful lives on the following bases Aggregate properties are depreciated using the unit of extraction method based on estimated economically recoverable reserves which results in a depreciation charge proportional to the depletion of reserves All other assets excluding land are depreciated on a straightline basis using rates that approximate the estimated useful lives of the assets as follows Assets Rate Land Not depreciated Buildings and leasehold improvements 10 to 40 years Aggregate properties Units of extraction Machinery and equipment 2 to 15 years Heavy mining equipment Operating hours Offce equipment 3 to 5 years Vehicles 1 to 5 years The Company reviews the residual value useful lives and depreciation method of depreciable assets on an annual basis and where revisions are required the Company applies such changes in estimates on a prospective basis The net carrying amounts of property plant and equipment assets are reviewed for impairment either individually or at the cashgenerating unit CGU level when events and changes in circumstances indicate the carrying amount may not be recoverable To the extent these carrying amounts exceed their recoverable amounts that excess is fully recognized in proft or loss in the fnancial year in which it is determined When signifcant parts of property plant and equipment are required to be replaced and it is probable that future economic benefts associated with the item will be available to the Company NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS DECEMBER 31 2012 AND 2011 IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS