Question 1

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

Accepted Answer

A)  The level at which and E&E asset is tested for impairment may consist of one or more cash-generating units 
B)  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. 
C)  IFRS 6 allows E&E assets to be tested for impairment at the individual asset level 
D)  IFRS 6 does not allow the reversal of impairment write-downs made against E&E assets 
A)  The level at which and E&E asset is tested for impairment may consist of one or more cash-generating units 
B)  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. 
C)  IFRS 6 allows E&E assets to be tested for impairment at the individual asset level 
D)  IFRS 6 does not allow the reversal of impairment write-downs made against E&E assets A

Question 2

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 D

Question 3

In the context of IFRS 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 costs are within the scope of IFRS 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

Question 5

Which of the following statements is correct?

Accepted Answer

A)  The IASB extractive industries project currently underway excludes disclosure requirements from its scope 
B)  IFRS 6 was issued by the IASB as an interim measure pending the completion of a comprehensive project dealing with accounting for the extractive industries 
C)  The IASB extractive industries project currently underway proposed the removal of the 'unit of account' concept in accounting for E&E assets 
D)  IFRS 6 was issued by the IASB as a result of their recent comprehensive extractive industries project 
A)  The IASB extractive industries project currently underway excludes disclosure requirements from its scope 
B)  IFRS 6 was issued by the IASB as an interim measure pending the completion of a comprehensive project dealing with accounting for the extractive industries 
C)  The IASB extractive industries project currently underway proposed the removal of the 'unit of account' concept in accounting for E&E assets 
D)  IFRS 6 was issued by the IASB as a result of their recent comprehensive extractive industries project

Question 6

Which of the following methods best reflects the traditional concept of an asset?

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 7

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

Question 8

IFRS 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 9

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 10

Which of the following methods tends to be restricted to small mining companies in South Africa?

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

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

Question 12

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 13

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

Accepted Answer

A)  exploratory drilling 
B)  miming acquisition rights 
C)  trenching 
D)  pre-exploration survey fees 
A)  exploratory drilling 
B)  miming acquisition rights 
C)  trenching 
D)  pre-exploration survey fees

Question 14

Mineral resources are specifically excluded from the scope of which of the following standards?
I IAS 2 Inventories
II IAS 16 Property, plant & equipment
III IAS 18 Revenue
IV IAS 38 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 15

Which of the following methods is inconsistent with historical cost accounting?

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 16

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

Accepted Answer

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

Question 17

Which of the following E&E costs would be classified as intangibles?

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 18

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 19

IFRS 6 requires disclosure of which of the following?

Accepted Answer

A)  accounting policies relating to pre-exploration costs 
B)  financing cash flows relating to E&E activities 
C)  impairment write-downs made on E&E assets 
D)  accounting policies relating to E&E assets 
A)  accounting policies relating to pre-exploration costs 
B)  financing cash flows relating to E&E activities 
C)  impairment write-downs made on E&E assets 
D)  accounting policies relating to E&E assets

Question 20

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)  IFRS 6 
B)  IAS 37 
C)  The Framework 
D)  IFRIC 1 
A)  IFRS 6 
B)  IAS 37 
C)  The Framework 
D)  IFRIC 1

Exam 16: Accounting for Mineral Resources

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

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:

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

Which costs are within the scope of IFRS 6?

Which of the following statements is correct?

Which of the following methods best reflects the traditional concept of an asset?

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

IFRS 6 is an example of:

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

Which of the following methods tends to be restricted to small mining companies in South Africa?

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

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

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

Mineral resources are specifically excluded from the scope of which of the following standards? I IAS 2 Inventories II IAS 16 Property, plant & equipment III IAS 18 Revenue IV IAS 38 Intangible assets

Which of the following methods is inconsistent with historical cost accounting?

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

Which of the following E&E costs would be classified as intangibles?

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

IFRS 6 requires disclosure of which of the following?

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

The Conceptual Framework of the Iasb

Shareholders Equity: Share Capital and Reserves

Fair Value Measurement

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Inventories

Employee Benefits

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Translation of the Financial Statements of Foreign Entities

Associates and Joint Ventures

Joint Arrangements

Filters