International Financial Reporting Standards (IFRS) 6
Exploration for and Evaluation of Mineral Resource
International Financial Reporting Standard (IFRS) 6, The exploration for and evaluation of mineral resources, is defined as “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 resources” (Wieck, Young 120). It is limited to setting the requirements for these mineral resources. The only expenses that can be covered under this standard are the costs incurred after the exploration of the area has begun and up to the point where the technical feasibility and commercial viability have been demonstrated (Wieck, Young 120). IFRS 6 excludes the activities that are covered in IAS 38, Intangible Assets, and IAS 16, Property, Plant, and Equipment (Wieck, Young 119). IFRS 6 also sets the requirements for the impairment testing and the disclosures so the users of the financial statements can easily understand the cash flows of the exploration and evaluation of the resources recognized (Wieck, Young 120). Some of the expenses that are included in the IFRS 6 are trenching, exploratory drilling, sampling, acquiring the rights to explore and any topographical, geophysical, geological, and geochemical studies (KPMG 6). The intangible assets that are associated with IFRS 6 include drilling rights, the right to explore, trenching costs and sampling costs and the tangible assets that are associated with IFRS 6 include drilling pumps, pipes, tanks, and drilling rigs (KPMG 9).
The recognition requirements for the exploration and evaluation of mineral resources is found under the Basis for Conclusion document., which goes along with the IFRS 6. This document acknowledges the fact that there different ways and different accounting...
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