relate to a qualifying asset;

• it incurs borrowing costs; and

• it undertakes activities that are necessary to prepare the asset for its intended use or sale.

However, when an asset is not considered as qualifying asset, or it is contrast to IAS 23, as a
result to this, there is an adoption of IFRS 11 Joint Arrangements, because some mining
companies may have an increased number of equity accounted investments. An equity
accounted investment is specifically not considered to be a qualifying asset under IAS 23, even if
it is undergoing development activities.

The next important standard also is the IFRS 6: Exploration for and Evaluation of
Mineral Resources, permits entities to continue to use their existing accounting policies for
exploration and evaluation assets, provided that such policies result in information that is
relevant and reliable. This also encourages the entity or company to be consistent to their
accounting policies. However, if there is changes in policies, the entity is required to
demonstrate that the change brings its financial statements closer to meeting the criteria in IAS
8.