IFRS 6 Flashcards
The objective of this IFRS is to specify the financial reporting for the exploration and evaluation of mineral resources.
In particular, the IFRS REQUIRES
A) Limited improvements to the existing accounting practices for exploration and evaluation expenditures
B)entities that recognize exploration and evaluation assets to assess such assets for impairment
C) disclosures that identify and explain the amounts in the entities financial statements arising from the exploration for and evaluation of the mineral sources
an entity shall not apply the IFRS to expenditures incurred:
A) Before the exploration for an evaluation of mineral resources, such as expenditures incurred before the entity has acquired the legal rights to explore a specific area
B) after the technical possibility and commercial viability of extracting a mineral resources are demonstrable.
The following are examples of expenditures that might be included it in the initial measurement of exploration and evaluation assets:
Acquisition of rights to explore
topographical, geological, Geophysical, geochemical studies exploratory drilling
trenching
sampling
activities relation to a valuation evaluating the technical and commercial viability of extracting mineral resources
After recognition, entity shall apply either of the two models
Cost model or revaluation model
One or more of the following facts and circumstances indicated that an entity should test exploration and evaluation assets for impairment
A) The period for which the entity has the right to explore in the specific area has expired, and is not expected to be renewed in the future
B) substantive expenditure on exploration for the evaluation of mineral resources in this specific area is neither budgeted nor plan
C) exploration for and a valuation of mineral resources in the specific area has not led to the discovery of commercial viable quantities of mineral resources and decided to discontinue such activities
D) sufficient data exists to indicate, although a development in the specific area is like me to proceed, the caring amount of exploration and evaluation of as it is unlikely to be recovered in for from successful development for a by sale
An entity shall disclose information that identifies and explains the amounts recognize it it’s financial statements arising from the exploration for and evaluation of mineral resources.
To comply with this, an entity shall disclose
A) accounting policies for exploration and evaluation expenditures including the recognition of exploration and evaluation assets
B) The amount of assets, liabilities, income and expenses and operating an interesting cash flows arising from the expiration for and evaluation of mineral resources
The main feature of the IFRS:
A) permits an entity to develop an accounting policy for exploration and evaluation assets.
B) requires entities recognizing exploration and evaluation assets to perform an impairment test on those assets when facts and circumstances suggest said to carrying amount of the assets may exceed recoverable amount
C) varies the recognition of impairment from that in IAS 36 but measures impairment in accordance with thAT standard once impairment is identified
