Essay About Limited Scope And Industry-Specific Standard Setting

Accounting for Mineral Resources
Accounting for Mineral Resources
Introduction to AASB 6, Exploration for and evaluation of mineral resources
AASB 6 is the Australian equivalent to IFRS 6 Exploration and Evaluation of Minerals Resources, which was issued by the IASB in December 2004.
Historically, the IASB has tended to avoid industry-specific standard setting, however the extractive industries, which include industries involved in seeking, finding and extracting minerals, oil and gas , present a significant economic contributor to the global economy and due to the unique accounting issues faced by these industries

Scope of AASB 6, Exploration for and evaluation of mineral resources
The scope of IFRS 6 and therefore AASB 6 is specifically limited to accounting for exploration and evaluation (E&E) expenditures incurred by an entity in connection with the ‘exploration for and valuation of mineral resources’.

The standard defines this process as being ‘the search for mineral resources, including minerals, oil, natural gas, and similar non-regenerative resources after the entity has obtained legal rights to explore in a specific area as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource.’

Because of the limited scope applied by IFRS, accounting policies should be determined in accordance with AASB 108, Accounting policies, Changes in Accoutring Estimates and Errors.i.e.

If a transaction, other event or condition is specifically covered by an existing Australian Accounting Standard, that standard should be applied in the determining the appropriate accounting policy, and;

If there is no specific Australian Accounting Standard that applies to a transaction, other event or condition, the entity’s management must