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Depletion IFRS Vs ASPE Simple Demo

The document outlines the accounting for depletion of a mine asset under ASPE and IFRS standards. It provides the costs to acquire and develop the mine totaling $1,000,000 under ASPE and $950,000 under IFRS. It then calculates the depletion cost per unit of production as $90/unit under ASPE and $85/unit for mining costs plus $5/unit for asset retirement costs under IFRS. In year 1, 2,000 units are depleted at these per unit rates, resulting in $180,000 of depletion expense under both standards.

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nishit
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54 views

Depletion IFRS Vs ASPE Simple Demo

The document outlines the accounting for depletion of a mine asset under ASPE and IFRS standards. It provides the costs to acquire and develop the mine totaling $1,000,000 under ASPE and $950,000 under IFRS. It then calculates the depletion cost per unit of production as $90/unit under ASPE and $85/unit for mining costs plus $5/unit for asset retirement costs under IFRS. In year 1, 2,000 units are depleted at these per unit rates, resulting in $180,000 of depletion expense under both standards.

Uploaded by

nishit
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Depletion

Mine Cost $750,000


Other Costs $200,000
ARO Costs $50,000
Total Costs $1,000,000
Salvage Value $100,000
Units of Production 10,000
Year 1 Units 2,000

ASPE and IFRS:


Inventory cost /unit Mine Cost Other Costs ARO Costs Salvage Value
$750,000 $200,000 $50,000 ($100,000) = $90
10,000
Units of Production

IFRS:
Accumulated Depletion/ unit:
Mine Cost Other Costs
$750,000 $200,000 ($100,000) = $85
10,000
Units of Production

Asset Retirement Obligation/ unit:


ARO Costs
$50,000 = $5
10,000

IFRS
Mine $950,000
Cash $950,000

To record acquisition of mine

Mine Asset:
Mine Cost $750,000
Other Costs $200,000
Total $950,000

Year 1 Depletion
Inventory 180,000
Accumulated Depletion $170,000
Asset Retirement Obligation $10,000
To record depletion of mine
Inventory Year 1 Units 2,000
x $90
180,000

Accumulated Depletion Year 1 Units 2,000


x $85
$170,000

Asset Retirement Obligation Year 1 Units 2,000


x $5
$10,000
/unit

/unit

/unit

ASPE
Mine $1,000,000
Asset Retirement Obligation $50,000
Cash $950,000
To record acquisition of mine

Mine Asset:
Mine Cost $750,000
Other Costs $200,000
ARO Costs $50,000
Total $1,000,000

Year 1 Depletion
Inventory 180,000
Accumulated Depletion 180,000

To record depletion of mine


Inventory Year 1 Units 2,000
x $90
180,000

Accumulated Depletion Year 1 Units 2,000


x $90
180,000

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