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 entitys 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.

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:

Footnote:

1 Ind AS 106, Exploration for and Evaluation of Mineral Resources will be applied with modification from a date to be notified later on.

(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.

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.

Measurement of Exploration and Evaluation Assets Measurement at recognition

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

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...

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