Question 1

AASB 6/IFRS 6 requires disclosure of which of the following?

Accepted Answer

A)  Accounting policies relating to E&E assets. 
B)  Impairment write-downs made on E&E assets. 
C)  Financing cash flows relating to E&E activities. 
D)  Accounting policies relating to pre-exploration costs. 
A)  Accounting policies relating to E&E assets. 
B)  Impairment write-downs made on E&E assets. 
C)  Financing cash flows relating to E&E activities. 
D)  Accounting policies relating to pre-exploration costs. A

Question 2

As per AASB 6 Exploration for and Evaluation of Mineral Resources, mineral resources include:
I. Oil
II. Minerals
III. Natural gas
IV. Non-regenerative resources

Accepted Answer

A)  I, II and III only 
B)  I, III and IV only 
C)  II, III and IV only 
D)  I, II, III and IV 
A)  I, II and III only 
B)  I, III and IV only 
C)  II, III and IV only 
D)  I, II, III and IV D

Question 3

The entry to record an obligation for removal and restoration incurred during the exploration and evaluation (E&E) phase of a mining project is:

Accepted Answer

A)  DR E&E asset; CR E&E expense 
B)  DR Removal and restoration expense; CR E&E asset 
C)  DR E&E asset; CR Provision for removal and restoration 
D)  DR E&E expense; CR Provision for removal and restoration 
A)  DR E&E asset; CR E&E expense 
B)  DR Removal and restoration expense; CR E&E asset 
C)  DR E&E asset; CR Provision for removal and restoration 
D)  DR E&E expense; CR Provision for removal and restoration C

Question 4

The obligation to record a provision for removal and restoration costs arising from mining exploration and evaluation arises through the application of:

Accepted Answer

A)  IFRIC 1. 
B)  AASB 6. 
C)  AASB 137. 
D)  The Framework. 
A)  IFRIC 1. 
B)  AASB 6. 
C)  AASB 137. 
D)  The Framework.

Question 5

Which of the following is not within the scope of the IASB extractive activities project?

Accepted Answer

A)  The definition of reserves and resources. 
B)  Disclosure requirements for reserves and resources. 
C)  Measurement of reserves and resources on initial recognition as an asset. 
D)  Whether to expense or capitalise costs recognised after recognition of reserves and resources as assets. 
A)  The definition of reserves and resources. 
B)  Disclosure requirements for reserves and resources. 
C)  Measurement of reserves and resources on initial recognition as an asset. 
D)  Whether to expense or capitalise costs recognised after recognition of reserves and resources as assets.

Question 6

Which costs are within the scope of AASB 6?

Accepted Answer

A)  Development phase expenditure. 
B)  Exploration and evaluation phase expenditure. 
C)  Pre-exploration and evaluation phase expenditure. 
D)  Both exploration and development phase expenditure. 
A)  Development phase expenditure. 
B)  Exploration and evaluation phase expenditure. 
C)  Pre-exploration and evaluation phase expenditure. 
D)  Both exploration and development phase expenditure.

Question 7

Accounting for the acquisition of equipment to be used in the extraction of mineral resources is covered by:

Accepted Answer

A)  AASB 6 Exploration for and Evaluation of Mineral Resources. 
B)  AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. 
C)  AASB 116 Property, Plant and Equipment. 
D)  AASB 138 Intangible Assets. 
A)  AASB 6 Exploration for and Evaluation of Mineral Resources. 
B)  AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. 
C)  AASB 116 Property, Plant and Equipment. 
D)  AASB 138 Intangible Assets.

Question 8

Which of the following statements in relation to assessing E&E assets for impairment is correct?

Accepted Answer

A)  AASB 6/IFRS 6 allows E&E assets to be tested for impairment at the individual asset level. 
B)  AASB 6/IFRS 6 does not allow the reversal of impairment write-downs made against E&E assets. 
C)  The level at which and E&E asset is tested for impairment may consist of one or more cash-generating units. 
D)  AASB 6/IFRS 6 allows the cash-generating unit or group of cash-generating units to which an E&E asset is allocated to be larger than a segment determined in accordance with IFRS 8. 
A)  AASB 6/IFRS 6 allows E&E assets to be tested for impairment at the individual asset level. 
B)  AASB 6/IFRS 6 does not allow the reversal of impairment write-downs made against E&E assets. 
C)  The level at which and E&E asset is tested for impairment may consist of one or more cash-generating units. 
D)  AASB 6/IFRS 6 allows the cash-generating unit or group of cash-generating units to which an E&E asset is allocated to be larger than a segment determined in accordance with IFRS 8.

Question 9

Accounting policies for exploration and evaluation costs should be determined in accordance with which accounting standard?

Accepted Answer

A)  AASB 6. 
B)  AASB 8. 
C)  AASB 106. 
D)  AASB 108. 
A)  AASB 6. 
B)  AASB 8. 
C)  AASB 106. 
D)  AASB 108.

Question 10

Which method of accounting for exploration and evaluation costs is used by most large oil and gas companies?

Accepted Answer

A)  The full cost method. 
B)  The appropriation method. 
C)  The area of interest method. 
D)  The successful efforts method. 
A)  The full cost method. 
B)  The appropriation method. 
C)  The area of interest method. 
D)  The successful efforts method.

Question 11

Which of the following is not included as part of the initial cost of exploration and evaluation assets?

Accepted Answer

A)  Trenching. 
B)  Geophysical studies. 
C)  Mining acquisition rights. 
D)  Pre-exploration survey fees. 
A)  Trenching. 
B)  Geophysical studies. 
C)  Mining acquisition rights. 
D)  Pre-exploration survey fees.

Question 12

Subsequent to initial recognition, E&E assets are required to be measured:

Accepted Answer

A)  under the cost model. 
B)  under the revaluation model. 
C)  at the lower of the cost and fair value. 
D)  either under the cost model or revaluation model. 
A)  under the cost model. 
B)  under the revaluation model. 
C)  at the lower of the cost and fair value. 
D)  either under the cost model or revaluation model.

Question 13

E&E assets are required to be tested for impairment:

Accepted Answer

A)  at least annually. 
B)  when there is an indication that the assets may be impaired. 
C)  prior to reclassification at the end of E&E activities. 
D)  only where commercially feasible reserves are not found through the E&E activities. 
A)  at least annually. 
B)  when there is an indication that the assets may be impaired. 
C)  prior to reclassification at the end of E&E activities. 
D)  only where commercially feasible reserves are not found through the E&E activities.

Question 14

Which of the following are included in AASB 6/IFRS 6 as factors indicating the E&E assets may be impaired?
I. Where there is no budget or plan for the incurrence of further substantial E&E expenditure in the specific area.
II. Whether the exploration rights for the specific area have expired or are expected to expire in the near future and there is no expectation of renewal.
III. Where the entity has established that the cost of the E&E asset is unlikely to be recovered in full from the successful development or sale of the specific area.
IV. Where the entity had decided to discontinue E&E activities in the specific area on the basis that such activities have not led to the discovery of commercially viable quantities of mineral resources.

Accepted Answer

A)  I, II and IV. 
B)  I, II and III. 
C)  I, III and IV. 
D)  II, III and IV. 
A)  I, II and IV. 
B)  I, II and III. 
C)  I, III and IV. 
D)  II, III and IV.

Question 15

Which of the following methods best reflects the volatility inherent in E&E activities?

Accepted Answer

A)  The full cost method. 
B)  The appropriation method. 
C)  The area of interest method. 
D)  The successful efforts method. 
A)  The full cost method. 
B)  The appropriation method. 
C)  The area of interest method. 
D)  The successful efforts method.

Question 16

The IFRS Interpretations Committee issued an interpretation in relation to the accounting for surface mine stripping costs (i.e. removal of rocks, soil and other waste materials to access the relevant mineral deposits) incurred during the production phase. The interpretation proposes:

Accepted Answer

A)  this asset would be referred to as a stripping activity asset ('the asset'). 
B)  the asset would initially be recognised at cost plus directly attributable overhead costs. 
C)  waste removal (stripping) costs would be capitalised during the production phase of a surface mine, if certain criteria are met. 
D)  all of the options are correct. 
A)  this asset would be referred to as a stripping activity asset ('the asset'). 
B)  the asset would initially be recognised at cost plus directly attributable overhead costs. 
C)  waste removal (stripping) costs would be capitalised during the production phase of a surface mine, if certain criteria are met. 
D)  all of the options are correct.

Question 17

Which of the following statements is correct in relation to the use of the revaluation model to subsequently account for E&E assets?

Accepted Answer

A)  The revaluation model can only be used to account for tangible E&E assets. 
B)  The revaluation model can be used for tangible E&E assets where the fair value can be reliably measured. 
C)  The revaluation model can be used for intangible E&E assets where the fair value can be reliably measured. 
D)  The revaluation model can be used for tangible E&E assets only where there is an active market for the assets. 
A)  The revaluation model can only be used to account for tangible E&E assets. 
B)  The revaluation model can be used for tangible E&E assets where the fair value can be reliably measured. 
C)  The revaluation model can be used for intangible E&E assets where the fair value can be reliably measured. 
D)  The revaluation model can be used for tangible E&E assets only where there is an active market for the assets.

Question 18

The majority of an entity's obligations for removal and restorations costs are incurred during which phase of a project?

Accepted Answer

A)  Evaluation phase. 
B)  Exploration phase. 
C)  Development phase. 
D)  Technical feasibility phase. 
A)  Evaluation phase. 
B)  Exploration phase. 
C)  Development phase. 
D)  Technical feasibility phase.

Question 19

The scope of AASB 6 is specifically limited to accounting for:

Accepted Answer

A)  exploration and evaluation expenditures. 
B)  exploration, evaluation and development expenditures. 
C)  pre-exploration, exploration and evaluation expenditures. 
D)  pre-exploration, exploration, evaluation and development expenditures. 
A)  exploration and evaluation expenditures. 
B)  exploration, evaluation and development expenditures. 
C)  pre-exploration, exploration and evaluation expenditures. 
D)  pre-exploration, exploration, evaluation and development expenditures.

Question 20

Which of the following E&E costs would be classified as intangibles?
I. Drilling rights.
II. Exploration licenses.
III. Equipment inspection costs.
IV. Capitalised consumable costs.

Accepted Answer

A)  I, II and IV. 
B)  I, II and III. 
C)  I, III and IV. 
D)  II, III and IV. 
A)  I, II and IV. 
B)  I, II and III. 
C)  I, III and IV. 
D)  II, III and IV.

Exam 34: Accounting for Mineral Resources

AASB 6/IFRS 6 requires disclosure of which of the following?

As per AASB 6 Exploration for and Evaluation of Mineral Resources, mineral resources include: I. Oil II. Minerals III. Natural gas IV. Non-regenerative resources

The entry to record an obligation for removal and restoration incurred during the exploration and evaluation (E&E) phase of a mining project is:

The obligation to record a provision for removal and restoration costs arising from mining exploration and evaluation arises through the application of:

Which of the following is not within the scope of the IASB extractive activities project?

Which costs are within the scope of AASB 6?

Accounting for the acquisition of equipment to be used in the extraction of mineral resources is covered by:

Which of the following statements in relation to assessing E&E assets for impairment is correct?

Accounting policies for exploration and evaluation costs should be determined in accordance with which accounting standard?

Which method of accounting for exploration and evaluation costs is used by most large oil and gas companies?

Which of the following is not included as part of the initial cost of exploration and evaluation assets?

Subsequent to initial recognition, E&E assets are required to be measured:

E&E assets are required to be tested for impairment:

Which of the following methods best reflects the volatility inherent in E&E activities?

The IFRS Interpretations Committee issued an interpretation in relation to the accounting for surface mine stripping costs (i.e. removal of rocks, soil and other waste materials to access the relevant mineral deposits) incurred during the production phase. The interpretation proposes:

Which of the following statements is correct in relation to the use of the revaluation model to subsequently account for E&E assets?

The majority of an entity's obligations for removal and restorations costs are incurred during which phase of a project?

The scope of AASB 6 is specifically limited to accounting for:

Which of the following E&E costs would be classified as intangibles? I. Drilling rights. II. Exploration licenses. III. Equipment inspection costs. IV. Capitalised consumable costs.

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Fair Value Measurement

Inventories

Property, Plant and Equipment

Intangible Assets

Impairment of Assets

Provisions, Contingent Liabilities and Contingent Assets

Employee Benefits

Leases

Financial Instruments

Income Taxes

Share Capital and Reserves

Share Based Payment

Revenue

Presentation of Financial Statements

Statement of Cash Flows

Accounting Policies and Other Disclosures

Earnings Per Share

Operating Segments

Related Party Disclosures

Sustainability and Corporate Social Responsibility Recording

Foreign Currency Transactions and Forward Exchange Contracts

Translation of Foreign Currency Financial Statements

Business Combinations

Consolidation: Controlled Entities

Consolidation: Wholly Owned Entities

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Associates and Joint Ventures

Joint Arrangements

Insolvency and Liquidation

Agriculture

Filters