Educational Material on Ind AS 106 Exploration for and Evaluation of Mineral Resources

Educational Material on Ind AS 106 Exploration for and Evaluation of Mineral Resources

Ind AS 106 Exploration for and Evaluation of Mineral Resources : Ind AS 106, ‘Exploration for and evaluation of mineral resources’, addresses the financial reporting for the exploration for and evaluation of mineral resources. It does not address other aspects of accounting by entities engaged in the exploration for and evaluation of mineral reserves. Activities outside the scope of Ind AS 106 are accounted for as per the applicable standards. The accounting policy adopted for the recognition of exploration and evaluation assets should result in relevant and reliable information. Ind AS 106 permits companies in this sector to continue applying policies for the recognition of exploration and evaluation assets that were followed under the previous GAAP. The accounting policy may be changed only if the change makes the financial statements more relevant and no less reliable, or more reliable and no less relevant.

Educational Material on Ind AS 106 Exploration for and Evaluation of Mineral Resources

Ind AS 106 Exploration for and Evaluation of Mineral Resources : IndAS 106 – Exploration & Evaluation of Mineral Resources, In this article you can find complete details for Indian Accounting Standard 106, This Ind AS Tells about Exploration & Evaluation of Mineral Resources. In this article we provide short summary for Ind AS 106 like – Applicability of IndAS 106, Journal Entries related to IndAS 106, Impairment and Disclosure details for IndAS 106.

Objective

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The objective of this Indian Accounting Standard is to specify the financial reporting for the exploration for and evaluation of mineral resources. In particular, the Indian Accounting Standard requires:

(a) limited improvements to existing accounting practices for exploration and evaluation expenditures.

(b) entities that recognise exploration and evaluation assets to assess such assets for impairment in accordance with this Indian Accounting Standard and measure any impairment in accordance with Ind AS 36 Impairment of Assets.

(c) disclosures that identify and explain the amounts in the entity’s financial statements arising from the exploration for and evaluation of mineral resources and help users of those financial statements understand the amount, timing and certainty of future cash flows from any exploration and evaluation assets recognised.

Scope

An entity shall apply the Indian Accounting Standard to exploration and evaluation expenditures that it incurs. The Indian Accounting Standard does not address other aspects of accounting by entities engaged in the exploration for and evaluation of mineral resources. An entity shall not apply the Indian Accounting Standard to expenditures incurred: 1 Ind AS 106, Exploration for and Evaluation of Mineral Resources will be applied with modification from a date to be notified later on.

(a) before the exploration for and evaluation of mineral resources, such as expenditures incurred before the entity has obtained the legal rights to explore a specific area.

(b) after the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.

Recognition of Exploration and Evaluation Assets Temporary exemption from Ind AS 8 paragraphs 11 and 12

When developing its accounting policies, an entity recognising exploration and evaluation assets shall apply paragraph 10 of Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Paragraphs 11 and 12 of Ind AS 8 specify sources of authoritative requirements and guidance that management is required to consider in developing an accounting policy for an item if no Accounting Standard applies specifically to that item. Subject to paragraphs 9 and 10 below, this Accounting Standard exempts an entity from applying those paragraphs to its accounting policies for the recognition and measurement of exploration and evaluation assets.

Measurement after recognition

After recognition, an entity shall apply either the cost model or the revaluation model to the exploration and evaluation assets. If the revaluation model is applied (either the model in Ind AS 16 Property, Plant and Equipment or the model in Ind AS 38) it shall be consistent with the classification of the assets (see paragraph 15).

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Educational Material on Ind AS 106 Exploration for and Evaluation of Mineral Resources 

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Educational Material on Ind AS 106 Exploration for and Evaluation of Mineral Resources

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