Question 1

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

Question 2

Which costs are within the scope of AASB 6?

Accepted Answer

A)  Pre-exploration and evaluation phase expenditure 
B)  Exploration and evaluation phase expenditure 
C)  Development phase expenditure 
D)  All of the above 
A)  Pre-exploration and evaluation phase expenditure 
B)  Exploration and evaluation phase expenditure 
C)  Development phase expenditure 
D)  All of the above B

Question 3

In the context of AASB 6, E&E stands for:

Accepted Answer

A)  evaluation and extraction 
B)  exploration and evaluation 
C)  extraction and exploration 
D)  exploration and expenditure 
A)  evaluation and extraction 
B)  exploration and evaluation 
C)  extraction and exploration 
D)  exploration and expenditure B

Question 4

Which of the following E&E costs would be classified as intangibles?
I $\quad$drilling rights
II $\quad$equipment inspection costs 
III $\quad$exploration licenses 
IV $\quad$capitalized consumable costs

Accepted Answer

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

Question 5

Which of the following methods involves capitalizing exploration and evaluation costs using a larger cost centre than an area of interest such as a country of region?

Accepted Answer

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

Question 6

AASB 6 Exploration for and Evaluation of Mineral Resources was issued by the AASB in:

Accepted Answer

A)  2000 
B)  2004 
C)  2006 
D)  2007 
A)  2000 
B)  2004 
C)  2006 
D)  2007

Question 7

Most large oil and gas companies use which of the following methods to account for exploration and evaluation costs?

Accepted Answer

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

Question 8

Accounting policies for exploration and evaluation costs should be determined:

Accepted Answer

A)  in accordance with AASB 6 
B)  in accordance with AASB 108 
C)  in accordance with AASB 106 
D)  in accordance with AASB 8 
A)  in accordance with AASB 6 
B)  in accordance with AASB 108 
C)  in accordance with AASB 106 
D)  in accordance with AASB 8

Question 9

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

Accepted Answer

A)  AASB 6 
B)  AASB 108 
C)  AASB 116 
D)  AASB 138 
A)  AASB 6 
B)  AASB 108 
C)  AASB 116 
D)  AASB 138

Question 10

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

Accepted Answer

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

Question 11

Which of the following are included in AASB 6 as factors indicating the E&E assets may be impaired?
I 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
II where there is no budget or plan for the incurrence of further substantial E&E expenditure in the specific area
III 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
IV 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

Accepted Answer

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

Question 12

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 $\quad$E&E asset$\quad$$\quad$$\mathrm { xx }$
CR $\quad$E&E expense$\quad$$\quad$$\mathrm { xx }$ 
B)  DR $\quad$E&E expense$\quad$$\quad$$\mathrm { xx }$
CR $\quad$Provision for removal and restoration$\quad$$\mathrm { xx }$ 
C)  DR $\quad$Removal and restoration expense$\quad$$\quad$$\mathrm { xx }$
CR$\quad$ E\&E asset$\quad$$\quad$$\mathrm { xx }$ 
D) DR $\quad$E&E asset$\quad$$\quad$$\quad$$ \mathrm{xx} $
$ \mathrm{CR} $ $\quad$Provision for removal and restoration$\quad$$\quad$$ \mathrm{xx} $ 
A)  DR $\quad$E&E asset$\quad$$\quad$$\mathrm { xx }$
CR $\quad$E&E expense$\quad$$\quad$$\mathrm { xx }$ 
B)  DR $\quad$E&E expense$\quad$$\quad$$\mathrm { xx }$
CR $\quad$Provision for removal and restoration$\quad$$\mathrm { xx }$ 
C)  DR $\quad$Removal and restoration expense$\quad$$\quad$$\mathrm { xx }$
CR$\quad$ E\&E asset$\quad$$\quad$$\mathrm { xx }$ 
D) DR $\quad$E&E asset$\quad$$\quad$$\quad$$ \mathrm{xx} $
$ \mathrm{CR} $ $\quad$Provision for removal and restoration$\quad$$\quad$$ \mathrm{xx} $

Question 13

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

Accepted Answer

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

Question 14

The scope of AASB 6 is limited to:

Accepted Answer

A)  Exploration and evaluation expenditures 
B)  Pre-exploration, exploration and evaluation expenditures 
C)  Exploration, evaluation and development expenditures 
D)  Pre-exploration, exploration, evaluation and development expenditures 
A)  Exploration and evaluation expenditures 
B)  Pre-exploration, exploration and evaluation expenditures 
C)  Exploration, evaluation and development expenditures 
D)  Pre-exploration, exploration, evaluation and development expenditures

Question 15

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

Question 16

AASB 6 is an example of:

Accepted Answer

A)  an industry specific standard 
B)  a not-for-profit standard 
C)  a standard applicable to disclosing entities 
D)  a differential reporting standard based on size based criteria 
A)  an industry specific standard 
B)  a not-for-profit standard 
C)  a standard applicable to disclosing entities 
D)  a differential reporting standard based on size based criteria

Question 17

The journal entry required to recognise depreciation on a drilling rig that is being used in the exploration phase of a mining project is:

Accepted Answer

A)  DR $\quad$Depreciation expense - drilling rig $\quad$$ \quad \mathrm{xx} $ 
$ \mathrm{CR} $$\quad$ Accumulated depreciation - drilling rig$\quad$ $ \mathrm{xx} $ 
B)  DR Intangible E&E asset$\quad$$\quad$$\quad$$\mathrm { xx }$
CR Accumulated depreciation - drilling rig$\quad$$\quad$$\mathrm { xx }$. 
C)  DR Intangible E&E asset$\quad$$\quad$$\quad$$\mathrm { xx }$
CR Accumulated depreciation - drilling rig$\quad$$\quad$$\mathrm { xx }$.. 
D)  $\begin{array} { l l l } 
\text { DR } & \text { Intangible E\&E asset } & \mathrm { xx } \
& \mathrm { CR } \quad \text { Depreciation expense - drilling rig } & \mathrm { xx } \
\end{array}$ 
A)  DR $\quad$Depreciation expense - drilling rig $\quad$$ \quad \mathrm{xx} $ 
$ \mathrm{CR} $$\quad$ Accumulated depreciation - drilling rig$\quad$ $ \mathrm{xx} $ 
B)  DR Intangible E&E asset$\quad$$\quad$$\quad$$\mathrm { xx }$
CR Accumulated depreciation - drilling rig$\quad$$\quad$$\mathrm { xx }$. 
C)  DR Intangible E&E asset$\quad$$\quad$$\quad$$\mathrm { xx }$
CR Accumulated depreciation - drilling rig$\quad$$\quad$$\mathrm { xx }$.. 
D)  $\begin{array} { l l l } 
\text { DR } & \text { Intangible E\&E asset } & \mathrm { xx } \
& \mathrm { CR } \quad \text { Depreciation expense - drilling rig } & \mathrm { xx } \
\end{array}$

Question 18

Which of the following methods is the least applied method to account for exploration and evaluation costs?

Accepted Answer

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

Question 19

Mineral resources are specifically excluded from the scope of which of the following standards?
I AASB 102 Inventories
II AASB 116 Property, plant & equipment
III AASB 118 Revenue
IV AASB 138 Intangible assets

Accepted Answer

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

Question 20

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)  whether to expense or capitalize costs recognised after recognition of reserves and resources as assets 
C)  measurement of reserves and resources on initial recognition as an asset 
D)  disclosure requirements for reserves and resources 
A)  the definition of reserves and resources 
B)  whether to expense or capitalize costs recognised after recognition of reserves and resources as assets 
C)  measurement of reserves and resources on initial recognition as an asset 
D)  disclosure requirements for reserves and resources

Exam 17: Accounting for Mineral Resources

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

Which costs are within the scope of AASB 6?

In the context of AASB 6, E&E stands for:

Which of the following E&E costs would be classified as intangibles? I \quad drilling rights II \quad equipment inspection costs III \quad exploration licenses IV \quad capitalized consumable costs

Which of the following methods involves capitalizing exploration and evaluation costs using a larger cost centre than an area of interest such as a country of region?

AASB 6 Exploration for and Evaluation of Mineral Resources was issued by the AASB in:

Most large oil and gas companies use which of the following methods to account for exploration and evaluation costs?

Accounting policies for exploration and evaluation costs should be determined:

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

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

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

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

The scope of AASB 6 is limited to:

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:

AASB 6 is an example of:

The journal entry required to recognise depreciation on a drilling rig that is being used in the exploration phase of a mining project is:

Which of the following methods is the least applied method to account for exploration and evaluation costs?

Mineral resources are specifically excluded from the scope of which of the following standards? I AASB 102 Inventories II AASB 116 Property, plant & equipment III AASB 118 Revenue IV AASB 138 Intangible assets

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

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Shareholders Equity: Share Capital and Reserves

Fair Value Measurement

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Translation of the Financial Statements of Foreign Entities

Employee Benefits

Inventories

Property, Plant and Equipment

Leases

Understanding Australian Accounting Standards

Impairment of Assets

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Business Combinations

Consolidation: Principles and Accounting Requirements

Consolidation: Intragroup Transactions

Consolidation: Non Controlling Interest

Joint Arrangements

Associates and Joint Ventures

Filters

Which of the following E&E costs would be classified as intangibles? I $\quad$ drilling rights II $\quad$ equipment inspection costs III $\quad$ exploration licenses IV $\quad$ capitalized consumable costs