ASR Autumn 2012 - Topic 05 - 1pp.pdfVIP

122420 Accounting Standards + Regulation Topic 5: Natural Resources Topic 5 - Natural Resources 1 2Topic Overview 1) Accounting for Exploration Expenditure 1) Importance of issue 2) What exploration is, and accounting for 3) Consistency/inconsistency with framework 2) Accounting for Agricultural Activities 1) Importance of issue 2) What agriculture is, and accounting for C i t /i i t ith f k3) ons s ency ncons s ency w ramewor Topic 5 - Natural Resources 2 3Exploration Evaluation ? Australian Exploration Activities ? 1009 of the 2314 (44%) companies listed on the ASX are either Materials or Energy companies ? In 2010-11 Mining accounted for 15% of Australian GDP (RBA) ? Total Exports = $123.864 billion in 2009-10 ? Accounting Issue = how to value resources found Topic 5 - Natural Resources 3 4AASB 6 – Exploration and Evaluation of Mineral Resources Topic 5 - Natural Resources 4 5EE – Intro ? AASB 6 is not an industry standard ? It only pertains to the exploration and evaluation of mineral resources. Once discovered, the following standards (not exhaustive), take over: ? AASB 102 Inventories ? AASB 116 Property Plant and Equipment ? AASB 118 Revenue Topic 5 - Natural Resources 5 6EE – Expenditure ? For each area of interest, expenditures incurred in the exploration for and evaluation of mineral resources shall be: ? Expensed as incurred; or ? Partially or fully capitalised, and recognised as an exploration and evaluation asset if requirements in Aus 7.2 are satisfied. ? AASB 6.Aus7.1 Topic 5 - Natural Resources 6 7EE – Expenditure ? Conditions required in AASB6.Aus7.2: ? Rights to tenure of the area are current ? At least one of the following ? EE expenditure expected to be recouped through successful development and exploitation, or sale ? EE activities have not got to the point where it is possible to make a determination of the existence of economically recoverable reserves Topic 5 - Natural Resources 7 8EE – Area of Interest ? Area of Inte