Ind AS 106, Exploration for and Evaluation of Mineral Resources: The objective of the Ind AS 106 is to specify the financial reporting for the exploration for and evaluation of mineral resources.
The 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. 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 assets are exploration and evaluation expenditures recognised as assets as per entity’s accounting policy.
The Ind AS 106:
- permits an entity recognising exploration and evaluation assets to apply paragraph 10 of Ind AS 8 to develop an accounting policy for exploration and evaluation
- requires entities recognising exploration and evaluation assets to perform an impairment test on those assets when facts and circumstances suggest that the carrying amount of the assets may exceed their recoverable
When facts and circumstances suggest that the carrying amount exceeds the recoverable amount, an entity shall measure, present and disclose any resulting impairment loss in accordance with Ind AS 36.
- varies the recognition of impairment from that in Ind AS 36 but measures the impairment in accordance with that Standard once the impairment is
An entity shall determine an accounting policy for allocating exploration and evaluation assets to cash-generating units or groups of cash-generating units for the purpose of assessing such assets for impairment. Each cash – generating unit or group of units to which an exploration and evaluation asset is allocated shall not be larger than an operating segment determined in accordance with Ind AS 108, Operating Segments.
One or more of the following facts and circumstances indicate that an entity should test exploration and evaluation assets for impairment (the list is not exhaustive):
- the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be
- substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor
- exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific
- sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by
An entity shall disclose information that identifies and explains the amounts recognised in its financial statements arising from the exploration for and evaluation of mineral resources.