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. Now Check More Details from below…
IndAS 106 – Exploration & Evaluation of Mineral Resources
- This is applicable in relation to exploration & evaluation expenditures that it incurs.
- Exploration & evaluation expenditure incurred after obtaining the legal rights for such and till the technical feasibility is completed.
- Cost (if any) incurred before obtaining legal right is not dealt with any Ind-as so, it shall directly transferred to profit & loss account.
- Cost incurred after completion of technical feasibility shall be dealt by Ind as 16 (in case of tangible assets) and Ind as 38 (in case of intangible assets).
Some Examples Of Expenditure Incurred After Obtaining Legal Right Of Exploration And Till Completion Of Technical Feasibility Are As Follows
- Cost incurred for obtaining legal rights for exploration.
- Topological studies
- Geological studies
- Geochemical studies
- Geophysical studies
- Restoration cost
The above list is not exhaustive other directly attributable can be capitalised.
Expenditure related to the development of mineral resources shall not be recognised as exploration and evaluation assets.
- Ind AS 40 Investment Property
- Indian Accounting Standard (IndAS 2)
- IND AS 36 Impairment of Assets – Complete Details
- IndAS 1: Presentation of Financial Statement
Initial measurement:- all exploration and evaluaton assets shall be measured at cost.
|For cost of evaluation assets incurred||Extraction/evaluation assets Dr
To bank ac
|For liability incurred towards restoration||Extraction/evaluation assets Dr
To provision for restoration
|For amortisation of intangible portion of evaluation assets||Amortisation a/c Dr
To extraction/evaluation assets (intangible)
|For depreciation of tangible portion of evaluation assets||Depreciation a/c Dr
To extraction/evaluation assets (tangible)
|For restoration of work||Provision for restoration Dr
To bank a/c
|For recognition of depn & amortisation||Spl Dr
To amortisation of intangible asset
Suppose If Actual Restoration Expense Incurred Rs 800000 But We Have Made Provision At Rs 10,00,000 In That Case Journal Entry Passed By Us Are As Follows
LIABILITY FOR RESTORATION DR 1000000
TO BANK 800000
TO EXTRACTION/EVALUATION ASSET 200000
- Exploration period expired and no chance for renew.
- Physical damage to asset (flood,fire etc)
- Discovery not completed within given time frame.
2. Calculation of impairment is made as per ind-as 36.
3. Journal entries
Impairment loss Dr
To exploration & evaluation asset
Spl a/c Dr
To impairment loss
1. Disclose info. That indentifies and explains the amt recognised in the fs
2. Specific disclosures
- Accounting policies for exploration & evaluated assets
- Of assets,liabilities,income & expense
3. Revaluation consistent to ind as- 16 & 38