Understanding Australian Accounting Standards 3E - Loftus - SMch17_sm_loftus

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1、Chapter17:AccountingformineralresourcesSolutionsManualtoaccompanyUnderstandingAustralianAccountingStandardsByJaniceLoftus,KenLeo,RuthPicker,VictoriaWiseandKerryClarkPreparedbyKerryClarkJohnWiley&SonsAustralia,Ltd201317.11©JohnWileyandSonsAustralia,Ltd2013Chapter17:Accountingformineralres

2、ourcesChapter17–AccountingformineralresourcesDiscussionquestions1.Discussthecomplexitiesandconsiderationsanentityinvolvedintheextractiveindustriesmayfaceindeterminingtheaccountingpoliciestoapplytoexpendituresitincurs?Manyofthefinancialreportingissuesthataffectentitiesintheextractiveindus

3、triesarearesultoftheenvironmentinwhichtheyoperate.Thefinancialreportsofsuchentitiesneedtoreflecttherisksandrewardstowhichtheyareexposed.Asidefromgovernmentandenvironmentalinfluences,themainfeaturesofactivitiesundertakenintheextractiveindustriesare:·Highriskswithlittlerelationshiptopossib

4、lerewards–costsareoftenincurredinthehopeoffindingmineralre-sourcesinproduciblequantities.Sometimesthosecostscanbeveryhighandnonetheless,leadtonosignificantfinds.Ontheotherhand,somehighlyvaluablemineralresourcediscoveriesaremadeatverylittlecost.Thismakestheaccountingforcostsincurredinfind

5、ingmineralresourcesparticularlychallenging.·Timeandcosttoproduce–oncemineralreservesarediscovered,therecanbeconsiderableadditionalexpenditureinvolvedindevelopingandproducingthosereservescoupledwithasignificanttimelagbetweencommencementoftheexplorationactivitiesandproductionofthereserves.

6、Thisraisesissuesassociatedwiththelikelihoodandmagnitudeofeconomicbenefitsfromsuchexpenditures,whichcanmakeimpairmentassessmentsmoredifficult.2.DiscusswhichexpendituresisthescopeofAASB6limitedto?Accordingtoparagraph1ofAASB6,theobjectiveofthestandardislimitedtospecifyingthefinancialreporti

7、ngforthe‘explorationforandevaluationofmineralresources’,whichisdefinedas‘thesearchformineralresources,includingminerals,oil,naturalgasandsimilarnon-regenerativeresourcesaftertheentityhasobtainedlegalrightstoexploreinaspecificarea,aswellasthedeterminationofthetechnicalfeas