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PFRS 6

This document discusses accounting for exploration and evaluation expenditures for mineral resources under PFRS 6. It defines exploration and evaluation expenditures as costs incurred to search for mineral resources and determine feasibility of extraction, incurred before technical feasibility and commercial viability are proven. Development costs occur after feasibility is proven. Exploration and evaluation assets are initially measured at cost and can later be measured using the cost or revaluation model. The document provides examples of qualifying expenditures and outlines indicators for impairment testing of these assets.

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Princess Jullyn Claudio
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129 views13 pages

PFRS 6

This document discusses accounting for exploration and evaluation expenditures for mineral resources under PFRS 6. It defines exploration and evaluation expenditures as costs incurred to search for mineral resources and determine feasibility of extraction, incurred before technical feasibility and commercial viability are proven. Development costs occur after feasibility is proven. Exploration and evaluation assets are initially measured at cost and can later be measured using the cost or revaluation model. The document provides examples of qualifying expenditures and outlines indicators for impairment testing of these assets.

Uploaded by

Princess Jullyn Claudio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PFRS 6

EXPLORATION
FOR AND
EVALUATION OF
MINERAL
RESOURCES
LEARNING
OBJECTIVES
Explain the accounting for
EXPLORATION and EVALUATION
EXPENDITURES.
INTRODUCTION
Exploration for and evaluation of mineral
resources means the search for mineral resources,
including minerals, oil, natural gas and similar
non-regenerative resources AFTER the entity
has obtained legal rights to explore in a specific
area, as well as the determination of the technical
feasibility and commercial viability of extracting
the mineral resource.
INTRODUCTION
Exploration and evaluation expenditures are
expenditures incurred in connection with the
exploration and evaluation of mineral
resources BEFORE the technical feasibility
and commercial viability of extracting a
mineral resource is demonstrable.
INTRODUCTION
Development Costs are expenditures
incurred AFTER technical feasibility and
commercial viability are demonstrable.
INITIAL
MEASUREMENT
Exploration and evaluation assets are
initially measured at cost.
Includes present value of any
decommissioning and restoration costs.

Expenditures related to development of


mineral resources are not recognized.
INITIAL MEASUREMENT
Example of expenditures:
• Acquisition of rights to explore
• Topographical, geological, geochemical and
geophysical studies
• Exploratory drilling
• Trenching
• Sampling
• Activities in relation to evaluating the
technical feasibility and commercial viability
of extracting a mineral resource
SUBSEQUENT
MEASUREMENT

Exploration and evaluation assets are


subsequently measures using either cost model or
the revaluation model.
CHANGES IN ACCOUNTING
POLICY

If the change results in more relevant and no less


reliable, or more reliable and no less relevant,
information.
CLASSIFICATION
Treated as separate class of assets and classified
as tangible (e.g. vehicles and drilling rigs) or
intangible (e.g. drilling rights) depending on
nature of the assets.

Exploration and evaluation assets are assessed


first for impairment before reclassification.
IMPAIRMENT LOSS
When indication exists that their carrying amount
exceeds their recoverable amount.

Applies PAS 36 when making assessment, except


for allocation of impairment loss on assets with
cash-generating units.
INDICATION FOR
IMPAIRMENT
the right to explore has expired or will expire in the near
future and is not expected to be renewed
expenditures for further exploration and evaluation
activities are significantly higher than expected
exploration and evaluation activities in specific area
have to be discontinued because no mineral resources
have been discovered
the carrying amount of the exploration and evaluation
asset is unlikely to be fully recovered
Thanks!

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