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Thread: 06 - Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

  1. #1
    IND-AS
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    Thumbs up 06 - Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

    Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources


    (This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Paragraphs in bold type indicate the main principles. ).



  2. #2
    IND-AS
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    Thumbs up Objective of Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

    Objective of Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources


    Objective

    1. The objective of this Indian Accounting Standard is to specify the financial reporting for the exploration for and evaluation of mineral resources .

    2. In particular, the Indian Accounting Standard requires:

    (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 Indian Accounting Standard and measure any impairment in accordance with Ind AS 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.


  3. #3
    IND-AS
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    Thumbs up Scope of Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

    Scope of Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources


    Scope

    3. An entity shall apply the Indian Accounting Standard to exploration and evaluation expenditures that it incurs.

    4. The Indian Accounting Standard does not address other aspects of accounting by entities engaged in the exploration for and evaluation of mineral resources.

    5. An entity shall not apply the Indian Accounting Standard to expenditures incurred:

    (a) before the exploration for and evaluation of mineral resources, such as expenditures incurred before the entity has obtained the legal rights to explore a specific area.

    (b) after the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.


  4. #4
    IND-AS
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    Thumbs up Recognition of Exploration and Evaluation Assets of Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

    Recognition of Exploration and Evaluation Assets of Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources


    Recognition of Exploration and Evaluation Assets

    Temporary exemption from Ind AS 8 paragraphs 11 and 12


    6. When developing its accounting policies, an entity recognising exploration and evaluation assets shall apply paragraph 10 of Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

    7. Paragraphs 11 and 12 of Ind AS 8 specify sources of authoritative requirements and guidance that management is required to consider in developing an accounting policy for an item if no Accounting Standard applies specifically to that item. Subject to paragraphs 9 and 10 below, this Accounting Standard exempts an entity from applying those paragraphs to its accounting policies for the recognition and measurement of exploration and evaluation assets.



  5. #5
    IND-AS
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    Thumbs up Measurement of Exploration and Evaluation Assets of Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

    Measurement of Exploration and Evaluation Assets of Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources


    Measurement of Exploration and Evaluation Assets

    Measurement at recognition

    8. Exploration and evaluation assets shall be measured at cost.



  6. #6
    IND-AS
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    Thumbs up Elements of cost of exploration and evaluation assets of Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

    Elements of cost of exploration and evaluation assets of Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources


    Elements of cost of exploration and evaluation assets

    9. 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. The following are examples of expenditures that might be included in the initial measurement of exploration and evaluation assets (the list is not exhaustive):

    (a) acquisition of rights to explore;
    (b) topographical, geological, geochemical and geophysical studies;
    (c) exploratory drilling;
    (d) trenching;
    (e) sampling; and
    (f) activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource.

    10. Expenditures related to the development of mineral resources shall not be recognised as exploration and evaluation assets. The Framework for the Preparation and Presentation of Financial Statements issued by the Institute of Chartered Accountants of India and Ind AS 38 Intangible Assets provide guidance on the recognition of assets arising from development.

    11. In accordance with Ind AS 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.


  7. #7
    IND-AS
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    Thumbs up Measurement after recognition of Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

    Measurement after recognition of Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources


    Measurement after recognition

    12. After recognition, an entity shall apply either the cost model or the revaluation model to the exploration and evaluation assets. If the revaluation model is applied (either the model in Ind AS 16 Property, Plant and Equipment or the model in Ind AS 38) it shall be consistent with the classification of the assets (see paragraph 15).


  8. #8
    IND-AS
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    Thumbs up Changes in accounting policies of Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

    Changes in accounting policies of Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources


    Changes in accounting policies

    13. An entity may change its accounting policies for exploration and evaluation expenditures if the change makes the financial statements more relevant to the economic decision-making needs of users and no less reliable, or more reliable and no less relevant to those needs. An entity shall judge relevance and reliability using the criteria in Ind AS 8.

    14. To justify changing its accounting policies for exploration and evaluation expenditures, an entity shall demonstrate that the change brings its financial statements closer to meeting the criteria in Ind AS 8, but the change need not achieve full compliance with those criteria.


  9. #9
    IND-AS
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    Thumbs up Presentation - Classification of exploration and evaluation assets of Indian Accounting Standard (Ind AS) 106

    Presentation - Classification of exploration and evaluation assets of Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources

    Presentation

    Classification of exploration and evaluation assets


    15. An entity shall classify exploration and evaluation assets as tangible or intangible according to the nature of the assets acquired and apply the classification consistently.

    16. Some exploration and evaluation assets are treated as intangible (eg drilling rights), whereas others are tangible (eg vehicles and drilling rigs). 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.



  10. #10
    IND-AS
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    Thumbs up Reclassification of exploration and evaluation assets of Indian Accounting Standard (Ind AS) 106 - Exploration for and Evaluation of Mineral Resources

    Reclassification of exploration and evaluation assets of Indian Accounting Standard (Ind AS) 106

    Exploration for and Evaluation of Mineral Resources


    Reclassification of exploration and evaluation assets

    17. An exploration and evaluation asset shall no longer be classified as such when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. Exploration and evaluation assets shall be assessed for impairment, and any impairment loss recognised, before reclassification.


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