Show
Depletion of Mineral Resources Terms in this set (91)PFRS 6 Accounting for expenditures on Exploration for and evaluation of Mineral Resources Exploration for and evaluation of mineral resources The search for mineral resources, including minerals, oils, 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. Exploration and evaluation expenditures Expenditures incurred by an entity in connection with the exploration for and evaluation of mineral resources BEFORE the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. PFRS 6 ; IFRS 6 Applies to expenses incurred AFTER legal rights to explore but BEFORE the existence of mineral reserves is in fact ESTABLISHED and the technical feasibility and commercial viability of extracting mineral resources are DEMONSTRABLE. Development Costs Expenses incurred AFTER Tech Feasib and Comm Viability are demonstrable. True PFRS 6 temporarily exempts an entity from applying the hierarchy of reporting standards. True PFRS 6 permits entities to develop their own accounting policies for exploration and evaluation assets that results to relevant and reliable information based entirely on the MANAGEMENT'S JUDGEMENT and WITHOUT THE NEED to consider the hierarchy of standards in PAS 8 (1.PFRS 2. JUDGEMENT) Initial Measurement Exploration and evaluation assets are initially measured at COST Exploration and evaluation assets Exploration and evaluation expenditures recognized as assets in accordance with the entity's accounting policy. Included in Initial Measurement of Exploration and Evaluation Assets ; Included in EEA a. Acquisition of rights to explore Not recognized as EEA Expenditures related to the development of mineral resources. Subsequent Measurement Exploration and evaluation assets are measured either under COST MODEL or REVALUATION MODEL. True An entity may change its accounting policy for exploration and evaluation expenditures if the change results in more relevant and no less reliable and no less relevant information. And the entity judges relevance and reliability in accordance of PAS 8 (Changes in Accounting Policy, Accounting Estimates and Errors) Classification of Exploration and Evaluation Assets ; Class of EEA ; Classification of EEA Exploration and Evaluation assets are a SEPARATE CLASS of ASSETS and classified as TANGIBLE or INTANGIBLE Reclassification of EEA ; Reclass of EEA When technical feasibility and commercial viability are demonstrable, the EEA are reclassified in accordance with other relevant standards. The EEA are assessed first for impairment before the reclassification. True EEA are assessed for impairment when an indication exists that their CA exceeds their recoverable amount.
True PAS 36 (Impairment) applies when making impairment assessments except for the allocation of impairment of cash generating units wherein the entity is allowed to determine its own accounting policy for the allocation. Indication of EEA impairment a. The right to explore has expired or will expire in the near future and is not expected to be renewed. b. Expenditures for furhter exploration and evaluation of activities are significantly higher than expected. c. The exploration and evaluation activities in a specific area have to be discontinued because no mineral resources have been discovered. d. Indication exists that, although a specific area will be developed, the carrying amount of the EEA is unlikely to be fully recovered. Natural Resources ; Mineral Resources ; Wasting Assets ; Wasting Asset Material objects of economic value and utility to man produced by nature. Natural Resources ; Mineral Resources ; Wasting Assets ; Wasting Asset Include petroleum, minerals and timber. Have two main features: True Unlike PPE, natural resources are consumed physically over the period of use and do not maintain their physical characteristics. Natural Resources ; Mineral Resources ; Wasting Assets ; Wasting Asset Include coal, oil, ore, precious metals like gold and silver, and timber.
True Once wasting assets are physically consumed, they cannot be replaced anymore. True Wasting assets can only be replaced by the force of nature. True Natural Resources cannot be replaced by man. True
Wasting Assets are physically consumed and irreplaceable. True At present, the IFRS does not address wasting assets. There is no comprehensive standard that i applicable to the extractive or mining industry. Costs of natural Resources Costs incurred in acquiring and preparing various natural resources 2. Exploration Costs - Amount paid to FIND the natural resources AFTER legal rights has been obtained. Accounted for under PFRS 6. 3. (Intangible) Development Costs - amounts paid to prepare the resource site for mining. These include drilling costs and costs pf construction of tunnels, shafts, and wells. 4. Estimated Restoration Costs Acquisition Costs ; Initial Cost Is the price paid to obtain the property right search and find an undiscovered natural resource. It can also be the price paid for an already discovered resource. It can also be a lease payments for property containing a productive natural resource, included in these acquisition costs are royalty payments to the owner of the property. True If there is a residual land value after the extraction of the natural resource, the portion of the acquisition cost applicable to the land may be included in the natural resource account or may be set up in a separate account and the remaining cost should be charged to the natural resource account. True The land value is the residual value of a wasting asset for the purposes of computing depletion. True Acquisition costs of natural resources are determined similarly with cost of PPE. True Generally, the acquisition costs of natural resources is recorded in an account titled "Undeveloped property". Later assigns that cost if the exploration is SUCCESSFUL. If UNSUCCESSFUL, it writes off the acquisition costs as IMPAIRMENT LOSS. Restoration Costs Costs entities incur to restore property to its natural state after the extraction has occured. Costs are capitalized as part of the cost of natural resource to the extent the entity has a present obligation to restore the property. The amount included in the depletion base is the FAIR VALUE of the obligation to restore the property after extraction. True Restoration costs are capitalized as part of the cost of natural resource to the extent the entity has a present obligation to restore the property. The amount included in the depletion base is the FAIR VALUE of the obligation to restore the property after extraction. exploration costs Once the entity has obtained legal rights to explore a specific area, it incurs these costs need to find the resource. These are accounted for in accordance to the accounting policy developed by the management's judgement. Either capitalized or expensed. exploration costs Expenditure incurred before the technical feasibility and commercial viability of extracting a mineral resource are demonstrated. exploration costs Cost incurred in an attempt to locate the natural resource that can economically be extracted or exploited. Successful Effort In this method, only the exploration cost directly related to the discovery of commercially producible natural resource is capitalized as cost of the resource property. Successful Effort In this method, exploration costs related to "dry holes" or unsuccessful discovery is expensed during the period. Full Cost Under this method, all exploration costs, whether successful or not are capitalized as cost of the successful discovery. Successful Effort Method used by most large and successful oil entities. Full cost Popular with small oil companies. Development Costs Is the cost incurred to exploit and extract the natural resource that has been located through successful exploration. Development Costs As soon as it is established that natural resource actually exists in a property, the entity incurs development costs to prepare the site prior to extraction. Development Costs 1. Tangible Equipment Costs - include all of the transportation and other heavy equipment needed to extract the resource and get it ready for market. These costs are NOT CAPITALIZED as CNR but as EQUIPMENT and depreciated separately. 2. Intangible Development Costs are drilling costs, (tunnels, Millan - wala sa Valix), sinking mine shafts, and construction of wells. These Costs have no tangible characteristics but are needed for the production of the natural resource. Intangible development costs are capitalized as part of the CNR. Estimated restoration costs Cost incurred in order to bring the property to its original condition. True PAS 16 provides that EC of Restoring property to its original condition is capitalized only when the entity incurs the obligation when the asset is acquired. Discounted Estimated restoration costs must be d________ True Estimated restoration costs must be existing present obligations required by law or contract. Depletion The removal, extraction or exhaustion of natural resource or wasting assets. True In essence, depletion is recognized as the cost of the material used in production and thus becomes the finished product of the extracting activity. Wasting asset ; WA ; Wasting Assets Total cost of the material available for production. Trust Fund Doctrine The share capital of a corporation is conceived as a trust fund for the protection of creditors. The corporation cannot pay dividends if it has a deficit because this would tantamount to a return of capital to shareholders. Wasting Asset Doctrine A wasting asset corporation or an entity engaged in the extraction of a natural resource, can legally return capital to shareholders during the lifetime of the corporation. Wasting Asset Doctrine The corporation can pay dividend not only to the extent of the RE but also to the extent of accumulated depletion. liquidating dividend ; liq div ; Return of Capital ; ROC The amount paid in excess of the RE is accounted for as a _______ or R______ True Wasting Asset doctrine is an exception to the trust fund doctrine. Maximum dividend by WA corp ; Max Div - WA (RE + Accu Depletion) - (Capital liquidated prior years + unrealized depletion in ending inventory) Output ; Production ; Production Method Most Common method of computing depletion. Objective of PFRS 6 to specify the financial reporting for the exploration for and evaluation of mineral resources Requirements of PFRS 6 (a) limited improvements to existing accounting practices for exploration and evaluation expenditures. (b) entities that recognise exploration and evaluation assets to assess such assets for impairment in accordance with this IFRS and measure any impairment in accordance with IAS 36 Impairment of Assets. (c) disclosures that identify and explain the amounts in the entity's financial statements arising from the exploration for and evaluation of mineral resources and help users of those financial statements understand the amount, timing and certainty of future cash flows from any exploration and evaluation assets recognised. Scope A. An entity shall apply the IFRS to exploration and evaluation expenditures that it incurs. Measurement at recognition Exploration and evaluation assets shall be measured at cost. Cost Measurement at recognition of Exploration and Evaluation Assets Expenditures related to the development of mineral resources These shall not be recognised as exploration and evaluation assets. TRUE An entity shall determine an accounting policy specifying which expenditures are recognised as exploration and evaluation assets and apply the policy consistently. In making this determination, an entity considers the degree to which the expenditure can be associated with finding specific mineral resources. TRUE In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets an entity recognises any obligations for removal and restoration that are incurred during a particular period as a consequence of having undertaken the exploration for and evaluation of mineral resources. TRUE To the extent that a tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is part of the cost of the intangible asset. However, using a tangible asset to develop an intangible asset does not change a tangible asset into an intangible asset.
TRUE An entity shall determine an accounting policy for allocating exploration and evaluation assets to cash-generating units or groups of cash-generating units for the purpose of assessing such assets for impairment. Each cash-generating unit or group of units to which an exploration and evaluation asset is allocated shall not be larger than an operating segment determined in accordance with IFRS 8 Operating Segments. Disclosures An entity shall disclose information that identifies and explains the amounts recognised in its financial statements arising from the exploration for and evaluation of mineral resources. An entity shall disclose: An entity shall treat exploration and evaluation assets as a separate class of assets and make the disclosures required by either IAS 16 or IAS 38 consistent with how the assets are classified." Depletion The systematic allocation of the depletion base of a natural resource over the period the natural resource is extracted. Depletion Base The capitalized cost of the Natural Resource less its residual value. Useful Life Normally expressed as the quantity of natural resources or number of production or similar units expected to be obtained from the natural resource by the entity. TRUE No depletion is recognized where no natural resource is extracted. True Depletion begins when the natural resources starts to be extracted and ceases when the natural resource is physically consumed or when the natural resource is derecognized such as when it is disposed of before the natural resource is extracted. TRUE Depletion is normally computed using the units of production method. Depletion rate per unit Depletion base / Total Estimated Units expected to be extracted from the natural resource. TRUE Depletion rate per unit x Actual Units Extracted = Depletion Charge TRUE Depletion Charge for the period forms part of the COST of INVENTORY. And the depletion charge will be recognized as expense as part of cost of sales, when inventory is sold. COST of INVENTORY ; Inventory Depletion Charge for the period forms part of the ______ COS ; COGS ; CGS Once part of inventory depletion charge will be recognized as expense as part of ________ TRUE The estimates of recoverable reserves from the natural resources and any residual value are reviewed at least at each financial year end. TRUE Any revisions with regards to estimate of recoverable reserves and residual values are treated prospectively under PAS 8. Tangible Equipment Costs Are transportation equipment, heavy machinery, tunnels, bunker, mine shaft, drilling rig foundation, and other equipment are identified as either movable or immovable. Movable Tangible Equipment ; Movable Those which can be used from one extracting site to another. Has Alternative use even after the natural resource is fully depleted. TRUE Movable tangible equipment costs are depreciated separately over its useful life using regular depreciation policy. Immovable Tangible Equipment ; Immovable Those which cannot be used from one extracting site to another. Has no alternative use after the natural resource is fully depleted. TRUE Immovable tangible equipment costs are depreciated separately over its useful life or the life of the resource, whichever is SHORTER. Any depreciating Method For Immovable T Eqmt: If equipment life is shorter use _____ Units of Production Method For Immovable T Eqmt: If Mine's life is shorter use _____ Sets with similar termsAcct3311 Chapter 1129 terms Tina_Huang32 Ch 10 Acc 32521 terms sweetgirl278 Accounting test 436 terms kateywagenmann AEC 442 Final Exam64 terms ian_brock2 Sets found in the same folderBiological assets30 terms myra_lardizabal Conceptual Framework46 terms isssyyyaaa PAS 20 - Accounting for Government Grants and Disc…34 terms isssyyyaaa Chapter 36 PFRS 9 Financial Instruments19 terms FritzReizen Other sets by this creatorChapter 3- Identification and T/F29 terms isssyyyaaa AUDITING THEORY: The Professional Standards, PSQC95 terms isssyyyaaa AUDITING THEORY: Auditor's Responsibility (Salosag…36 terms isssyyyaaa AUDITING THEORY: Auditing Process (Salosagcol)40 terms isssyyyaaa Verified questions
ECONOMICS In the past, maximum federal income tax rates have been much higher than they are today. In 1944, for example, those who had taxable incomes of $1,000,000 or more paid a marginal tax rate of 90 percent. If a person’s taxable income increased from$1 million to $1.1 million in that year, how much of the additional income would he or she have been able to keep? What might have justified such a high tax rate at that time? What impact do you think such a high tax rate would have on the U.S. economy today? Verified answer
ECONOMICS Why can it be difficult to decide what a “market” is for purposes of measuring competition? Verified answer
ECONOMICS One-fourth of the residents of the Burning Ridge Estates leave their garage doors open when they are away from home. The local chief of police estimates that 5 percent of the garages with open doors will have something stolen, but only 1 percent of those closed will have something stolen. If a garage is robbed, what is the probability the doors were left open? Verified answer
QUESTION For the following goods, is demand elastic, inelastic, or unit-elastic? Explain. What is the shape of the demand curve? A. demand by a snake-bite victim for an antidote B. demand by students for blue pencils Verified answer Recommended textbook solutions Statistical Techniques in Business and Economics15th EditionDouglas A. Lind, Samuel A. Wathen, William G. Marchal 1,236 solutions
Introductory Business Statistics1st EditionAlexander Holmes, Barbara Illowsky, Susan Dean 2,174 solutions Principles of Economics7th EditionN. Gregory Mankiw 1,394 solutions Fundamentals of Engineering Economic Analysis1st EditionDavid Besanko, Mark Shanley, Scott Schaefer 215 solutions Other Quizlet sets3.0342 terms sophie___smith The Great Gatsby, Ch. 7 Questions20 terms KZamrowskivm Math Final Exam Vocabulary78 terms Danasiabro1 Cell Study Guide31 terms Allie_May13 Related questionsQUESTION A subsidy on a good will lead to a greater benefit: 8 answers QUESTION In the circular flow diagram, who owns the factors of production and consumes all goods and services produced? 9 answers QUESTION MINE ECONOMICS 064: Economic resources owned by a business entity which are used in the generation of income or revenue out of the operations. 3 answers QUESTION Making the creator of the externality pay the true costs of their actions is called 2 answers How would you classify exploration and evaluation expenditures in the financial position?Exploration and development costs that are capitalised are classified as non-current assets in the statement of financial position, and should be separately disclosed on the face of the statement of financial position and distinguished from production assets, where material.
What are the exploration and evaluation assets?Exploration and evaluation assets shall be measured at cost at recognition. After recognition, an entity shall apply either the cost model or the revaluation model to the assets. The assets shall be classified as tangible or intangible according to the nature of the assets acquired.
Should exploration and evaluation costs be Capitalised?Expenditure incurred before exploration and evaluation begins cannot be capitalised, for example, costs incurred before the entity has obtained legal rights to explore an area.
What is the initial measurement of exploration and evaluation assets?Typical examples of expenditures that might be included in the initial measurement of exploration and evaluation assets include: exploratory drilling; sampling; trenching; topographical, geographical and geophysical studies; and other activities specific to evaluating the technical feasibility and commercial viability ...
|
How are exploratory and evaluation assets classified on the statement of financial position?
Urheberrechte © © 2024 paraquee Inc.
