ASIC has welcomed the $2.15 million impairment charge by ASX-listed Greenearth Energy Limited relating to its geothermal operations in its financial report for the half-year ended 31 December 2014.

ASIC reviewed the Greenearth Energy financial report for the year ended 30 June 2014 as part of its ongoing financial reporting surveillance program. We questioned the company on the carrying value of its exploration and evaluation assets for its geothermal operations. These operations had been affected by a Victorian Government moratorium on hydraulic fracturing and well activity, the withdrawal of funding by the Victorian Government and an unsuccessful grant application to the Australian Renewable Energy Agency.

The $2.15 million impairment charge represents the total carrying amount of Greenearth Energy’s exploration and evaluation assets.

As outlined in ASIC media release 14-294MR Focuses for 31 December 2014 financial reports, impairment testing and asset values remain a focus area of our financial reporting surveillances. ASIC reminds companies and those involved in preparing and approving financial reports that exploration and evaluation assets should be assessed for impairment when facts and circumstances suggest that the carrying amount exceeds the recoverable amount.