Topic 602 - Extractive activities

This topic includes FAQs relating to the following IFRS standards, IFRIC Interpretations and SIC Interpretations:

IFRS 6 Exploration for and Evaluation of Mineral Resources

Other resources

  • IFRS At a Glance by standard is available here
  • IFRS in Practice: An overview of IFRS 6 Exploration for and Evaluation of Mineral Resources is available here

 

Sub-topic within this main topic are set out below, with links to IFRS Interpretation Committee agenda decisions and BDO IFRS FAQs relating to that sub-topic below each sub-topic:

Sub-topic Number Sub-topic and Related FAQ
602.1 Scope and definitions
602.2 Recognition of exploration and evaluation assets
  • 602.1.1.1
602.3 Measurement at recognition
602.4 Measurement after recognition
602.5 Changes in accounting policy
602.6 Presentation
602.7 Impairment
602.8 Disclosure
602.9 Other issues

 

FAQ#

Title

Text of FAQ

602.1.1.1

IFRIC Agenda Decision - Application of the "full‑cost" method

January 2006 - The IFRIC was asked to clarify the effect of the limited scope of IFRS 6 on exploration and evaluation (E&E) activities. The IFRIC was asked if this limited scope (a) reflected the Board’s intention to impose limits on current national GAAP practices only in respect of activities conducted in the E&E phase, while permitting industry practices in other extractive industry areas (eg development and exploitation) to continue unchanged, or (b) whether the IASB focused on E&E activities because it was the only area for which the IASB was willing to grant some relief from the hierarchy for selection of accounting policies in IAS 8. Under the latter view, the IAS 8 hierarchy would apply fully to an entity’s selection of IFRS accounting policies for activities outside the E&E phase. The submission identified some inconsistencies between current extractive industry full‑cost accounting practices in respect of development and exploitation activities but questioned whether the IASB intended to require change from current practices in these areas in advance of a comprehensive extractive industry project.

The IFRIC noted that the effect of the limited scope of IFRS 6 was to grant relief only to policies in respect of E&E activities, and that this relief did not extend to activities before or after the E&E phase. The Basis for Conclusions on IFRS 6 includes the Board’s intention of limiting the need for entities to change their existing accounting policies for E&E activities. The IFRIC believed it was clear that the scope of IFRS 6 consistently limited the relief from the hierarchy to policies applied to E&E activities and that there was no basis for interpreting IFRS 6 as granting any additional relief in areas outside its scope. Therefore, the IFRIC believed that diversity in practice should not become established and decided not to add the issue to its agenda.

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