Exploration and Evaluation of Mineral Resources

<p>The Waste Asset Doctrine allows corporations to return capital to shareholders. (D)</p> Signup and view all the answers

<p>If the corporation has positive retained earnings. (B)</p> Signup and view all the answers

<p>Searching and assessing mineral resources for extraction (A)</p> Signup and view all the answers

<p>Acquisition of rights to explore mineral resources (C)</p> Signup and view all the answers

<p>They can qualify as exploration and evaluation assets (D)</p> Signup and view all the answers

<p>A natural resource that is consumed and cannot be replaced (B)</p> Signup and view all the answers

<p>Environmental impact assessments (B)</p> Signup and view all the answers

<p>They can continue to use previous policies if relevant and reliable (D)</p> Signup and view all the answers

<p>Cost analysis of extraction methods (D)</p> Signup and view all the answers

<p>Marketing of extracted minerals (D)</p> Signup and view all the answers

<p>They are physically consumed. (A)</p> Signup and view all the answers

<p>Operating Cost (D)</p> Signup and view all the answers

<p>The price paid to obtain the property containing natural resources. (C)</p> Signup and view all the answers

<p>Expenditures before demonstrating technical feasibility and commercial viability. (A)</p> Signup and view all the answers

<p>Full Cost Method (A)</p> Signup and view all the answers

<p>Residual land value after extraction. (A)</p> Signup and view all the answers

<p>Costs directly related to the discovery of natural resources. (A)</p> Signup and view all the answers

<p>Exploration Cost (A)</p> Signup and view all the answers

<p>Costs associated with the successful extraction and exploitation of a located resource. (D)</p> Signup and view all the answers

<p>Intangible costs are capitalized, while tangible equipment is expensed immediately. (C)</p> Signup and view all the answers

<p>When obligations arise at the acquisition of the asset as per law or contract. (D)</p> Signup and view all the answers

<p>The systematic allocation of costs of natural resources as they are extracted. (B)</p> Signup and view all the answers

<p>Output or production method. (A)</p> Signup and view all the answers

<p>Costs that are set up in a separate account and depreciated. (B)</p> Signup and view all the answers

<p>When they are added to the cost of resource property. (D)</p> Signup and view all the answers

<p>Selling and administrative expenses. (B)</p> Signup and view all the answers

The amount of a wasting asset's value divided by the estimated units to be extracted.

Multiply the depletion rate per unit by the number of units extracted during a period to determine the depletion expense.

The depreciation of mining equipment is based on the shorter of its useful life or the useful life of the wasting asset.

A company's capital is like a trust fund for creditors, protecting them. This prevents dividends from being paid out of capital during the company's lifetime.

An entity extracting a natural resource can legally return capital to shareholders, even during the company's lifetime, due to the depletion of the asset.

A natural resource that is physically consumed and cannot be replaced by humans.

Wasting assets are characterized by physical consumption and irreplaceability.

The price paid to obtain the property containing the natural resource. It's the initial cost of the wasting asset.

The value of the land remaining after the natural resource is extracted.

The portion of the acquisition cost that is directly related to the natural resource and will be depleted (used up) over time.

The expenses incurred to find and assess the feasibility and commercial viability of extracting a natural resource.

A method where only exploration costs directly related to discovering commercially viable resources are capitalized. Unsuccessful exploration costs are expensed.

A method where all exploration costs, regardless of success, are capitalized as part of the cost of the successful resource discovery.

The cost of preparing a natural resource for extraction or production after it's been found. This includes tangible equipment (machinery) and intangible costs (drilling, wells).

Physical assets used in resource extraction, like machinery, tunnels, and mine shafts. They are not added to the resource cost but depreciated over time.

Costs incurred in developing a natural resource, such as drilling, sinking mine shafts, and constructing wells. These costs become part of the resource's value.

The cost of restoring a property to its original condition after resource extraction. This cost can be added to the resource's cost or deducted from its residual value.

The gradual process of using up a natural resource. It's the systematic allocation of the resource's cost over the time it is extracted or produced.

The common method of calculating depletion, where the resource's cost is divided by the estimated total output or production.

The process of searching for mineral resources, including oil and gas, after obtaining legal rights to explore, and then determining if it's technically feasible and commercially viable to extract them.

Costs incurred during the search for mineral resources and determining their viability, such as acquiring exploration rights, geological studies, sampling, and drilling.

Whether exploration and evaluation expenditures qualify as an asset is not clearly defined by IFRS 6, leaving the decision to the entity.

IFRS 6 allows companies to choose their own accounting policy for recognizing exploration and evaluation assets, including continuing their previous policy if it's relevant and reliable.

Examples include acquiring exploration rights, conducting geological studies, sampling, drilling, and general administrative costs directly related to exploration and evaluation activities.

The information provided by a company's accounting policy should be useful and accurate for decision-making, even if it doesn't perfectly align with IFRS 6's specific guidance.

Wasting assets are crucial because they are essential resources for many industries, but they are finite and non-renewable, making their management and conservation vital.