PFRS 6 Exploration for and Evaluation of

Mineral Resources

Learning Objectives

  • Explain the accounting for exploration and

evaluation expenditures.

Conceptual Framework & Acctg.

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Standards (by: Zeus Vernon B. Millan)
Exploration and evaluation expenditures
• Exploration for and evaluation of mineral resources is
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.
• Exploration and evaluation expenditures are
expenditures incurred by an entity in connection with the
exploration for and evaluation of mineral resources before the
technical feasibility and commercial viability of extracting a
mineral resource are demonstrable.
Conceptual Framework & Acctg.
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Standards (by: Zeus Vernon B. Millan)
Accounting for exploration and evaluation
expenditures

• PFRS 6 permits entities to develop their own accounting

policy for exploration and evaluation assets which results in
relevant and reliable information based entirely on
management’s judgment and without the need to
consider the hierarchy of standards in PAS 8.
• This means that the entity may recognize exploration and
evaluation expenditures either as expense or asset
depending on the entity’s own accounting policy.
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Standards (by: Zeus Vernon B. Millan)
Measurement at recognition

• If the entity opts to capitalize exploration and evaluation

expenditures as assets, it shall measure them at cost.
• Subsequent to recognition, the exploration and
evaluation assets shall be measured using the cost
model or the revaluation model.

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Standards (by: Zeus Vernon B. Millan)
 APPLICATION OF CONCEPTS
 

PROBLEM 2: FOR CLASSROOM DISCUSSION

Conceptual Framework & Acctg. Standards (by: Zeus Vernon B. Millan) 6

OPEN FORUM
QUESTIONS????
REACTIONS!!!!!

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Standards (by: Zeus Vernon B. Millan)
 END
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