Table of Contents
- 1 What are exploration expenses?
- 2 What is exploration cost accounting?
- 3 What are exploration and evaluation assets?
- 4 What are development costs?
- 5 What IAS 6?
- 6 How many IFRS are issued by IASB so far?
- 7 How are general and administrative costs included in an exploration and evaluation asset?
- 8 How are expenses classified as assets or liabilities?
What are exploration expenses?
Exploration costs are the costs an oil or gas company incurs while searching for oil or gas to drill. Exploration costs include the cost of researching appropriate places to drill and the cost of actually drilling. These costs require considerable capital expenditures for equipment, labor, and other costs.
What is exploration cost accounting?
Exploration Expenses means all costs, expenses, obligations, liabilities and charges of whatsoever nature or kind incurred or chargeable, directly or indirectly, in connection with the exploration and development of the Property including, without limiting the generality of the foregoing, all costs reasonably …
What is exploration asset?
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.
What is exploration in accounting?
The term exploration 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 …
What are exploration and evaluation assets?
Exploration for and evaluation of mineral resources means 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 …
What are development costs?
A development cost definition will tell you it’s the cost a company incurs while researching and developing a new product or service. General practice dictates the research and development costs should be immediately expensed when costs are incurred.
Which costs are oil production?
Answer: In oil industry unit costing is used.
How is full cost calculated?
The full-cost calculation is simple. It looks like: (total production costs + selling and administrative costs + markup) ÷ the number of units expected to sell.
What IAS 6?
IFRS 6 permits an entity to develop an accounting policy for recognition of exploration and evaluation expenditures as assets without specifically considering the requirements of paragraphs 11 and 12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
How many IFRS are issued by IASB so far?
The following is the list of IFRS and IAS issued by the International Accounting Standard Board (IASB) in 2019. In 2019, there are 16 IFRS and 29 IAS. IAS will replace IFRS once it is finalized and issued by IASB.
What is the most common method of recording depletion of wasting assets?
The most common method of recording depletion for accounting purposes is the? units-of-production method.
What is the treatment of exploration and evaluation expenditures?
Based on IFRS 6, the exploration and evaluation expenditures are 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.
How are general and administrative costs included in an exploration and evaluation asset?
General and administrative costs are allocated to, and included in, the cost of an exploration and evaluation asset, but only to the extent that those costs can be related directly to operational activities in the area of interest to which the exploration and evaluation asset relates. In all other cases, these costs are expensed as incurred.
How are expenses classified as assets or liabilities?
Expenses are neither assets or liabilities. There are five categories; Revenues, Expenses, Assets, Liabilities, and Owners Equity. Revenues and Expenses populate the Income Statement. Assets, Liabilities, and Owners Equity populate the Balance sheet.
How are exploration and evaluation assets treated as intangible?
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.
When is an exploration and evaluation asset no longer classified?
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.