A principal purpose of IFRS 6 is to specify the circumstances in which entities should test exploration and evaluation costs for impairment, and when to require disclosure of information about such assets. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. IFRS 6 permits an entity to develop an accounting policy for recognition of exploration and evaluation expenditures as assets without specifically considering the requirements of paragraphs 11 and 12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. T.P. Subsequently, cost or the revaluation model, as described in IAS 16 and IAS 38. C Recent pronouncements of standard-setting bodies, and accepted industry practices Key IFRS 16 Definition. There was a lack of guidance prior to this IFRS Standard, and where national standards did exist, the accounting practices were diverse, and a number were used throughout the world to account for the costs involved in exploration and extraction. 3. This site uses cookies to provide you with a more responsive and personalised service. The company has rented an office with 5 years and the payment of $120,000 is at the end of each year. hyphenated at the specified hyphenation points. In several D An entity would not be permitted to change accounting policy unless there is a new or revised standard that replaces the existing requirements in IFRS 6. In your second example, you are correct. A Entities are required to change accounting policy for expenditure if the change results in more useful information The facts and circumstances outlined in IFRS 6 are non-exhaustive, and are applied instead of the 'indicators of impairment' in IAS 36 [IFRS 6.19-20], Entities are permitted to determine an accounting policy for allocating exploration and evaluation assets to cash-generating units or groups of CGUs. International Financial Reporting Standards - IFRS: International Financial Reporting Standards (IFRS) are a set of international accounting standards stating how particular types of … An entity accounts for its exploration and evaluation expenditure either in accordance with the Conceptual Framework or with the exemption permitted by IFRS 6. Examples with solutions 427. It also modifies impairment testing of exploration and evaluation assets by introducing different impairment indicators and allowing the carrying amount to be tested at an aggregate level (not greater than a segment). IFRS 6 was issued in December 2004 and applies to annual periods beginning on or after 1 January 2006. IFRS 16 Leases contains detailed guidance on how to account for lease modifications. Before reclassification, the assets should be tested for impairment. The entity’s right to explore in an area has expired, or will expire in the near future, without renewal. 3. These examples also illustrate the tagging of new elements added to the IFRS Taxonomy 2019 as a result of the analysis of common reporting practice on IFRS 13 Fair Value Measurement (see Example 15) and general improvements (see Examples 7, 8 and 17) . [IFRS 6.Appendix A], Exploration and evaluation expenditures are expenditures incurred in connection with the exploration and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource is demonstrable. 2. These entities' financial statements give information This allows an entity to apply an accounting policy for exploration and evaluation assets which is relevant and reliable, even though the policy may not be in full compliance with the Conceptual Framework. Please read, International Financial Reporting Standards, IFRS 6 Exploration for and Evaluation of Mineral Resources, European Union formally adopts updated references to the Conceptual Framework, AcSB updates research on extractive industries, 17th ESMA enforcement decisions report released, 16th ESMA enforcement decisions report released, IVSC explores extractive industry valuations, EFRAG endorsement status report 9 December 2019, Deloitte comment letter on DP/2010/1 'Extractive Activities', IAS Plus newsletter - Special Global Edition – IFRS 6 Exploration for and Evaluation of Mineral Resources, Extractive activities — Exploration for and evaluation of mineral resources, Extractive activities — Comprehensive project, Project on extractive industries carried over from IASC, Short-term project split off from comprehensive project, Effective for annual periods beginning on or after 1 January 2006, Amended Basis for Conclusions to IFRS 6 only, Entities recognising exploration and evaluation assets are required to perform an impairment test on those assets when specific facts and circumstances outlined in the standard indicate an impairment test is required. 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