PROBLEMS (Part 4)

PROBLEMS Problem 34-1 (IFRS)

Harriet Company is involved in the exploration for mineral rights. During the current

year, the entity incurred the following expenditures:

Exploratory drilling for minerals on site 2,000,000

Roads and infrastructure to access exploration site 3,500,000

Expenditures relating to the subsequent development of the resources 3,400,000

What amount should be initially recognized as exploration asset?

Problem 34-2 (IFRS)

Samantha Company is involved in the exploration for mineral resources. The accounting

policy is to recognize exploration asset initially at cost.

At the end of the current year, the following amounts were extracted from the financial

statements:
Trenching and sampling expenditure 1,000,000

Drilling rigs used for exploration, carrying amount 2,000,000

Drilling rigs used for exploration, depreciation expense 300,000

What amount of intangible exploration asset should be recognized in the

statement of financial position?

Problem 34-3 (IFRS)

During the current year, Longhorn Company incurred P5,000,000 in exploration cost for

each of 20 oil wells drilled in the current year in West Mindanao. Of the 20 wells drilled,

14 were dry holes.

The entity used the successful effort method of accounting. None of the oil found is

depleted in the current year.

What oil exploration expense should be reported in the income statement for

the current year?

Problem 34-4 (IFRS)

During the current year, Prospect Company incurred P4,000,000 in exploration cost of

15 oil wells drilled in the current year. Of the 15 wells drilled, 10 were dry holes.

The entity used the successful effort method of accounting. The entity depleted 30% of

the oil discovered in the current year

What amount of exploration cost would remain in the year-end statement of

financial position?