Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 34

EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES (IFRS 6)

1. OBJECTIVE

1.1 The International Accounting Standards Board (IASB) developed this Standard to make limited improvements to accounting practices for exploration and evaluation expenditures relating to mineral resources.

1.2 The Standard also specifies circumstances in which entities that recognize exploration and evaluation assets can test such assets for impairment. It also prescribes disclosure requirements with respect to information about exploration and evaluation assets, the level at which they should be assessed for impairment, and impairment losses, if any, recognized by the entities.

2. SYNOPSIS OF THE STANDARD

The summary of this Standard that an entity should apply to the exploration and evaluation expenditures on mineral resources that it incurs is presented next.

2.1 As defined in Appendix A to the Standard, exploration for and evaluation of mineral resources refers to

• The search for mineral resources, including minerals, oil, natural gas, and similar nonregenerative 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.

2.1.1 By implication, therefore, the Standard does not apply to

• Expenditures incurred before the entity has obtained legal rights to explore a specific area or
• After the technical feasibility and commercial viability of extracting ...