IndAS 106: Exploration & Evaluation of Mineral Resources

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


  1. This is applicable in relation to exploration & evaluation expenditures that it incurs.
  2. Exploration & evaluation expenditure incurred after obtaining the legal rights for such and till the technical feasibility is completed.
  3. Cost (if any) incurred before obtaining legal right is not dealt with any Ind-as so, it shall directly transferred to profit & loss account.
  4. 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
  • Drilling
  • Trenching
  • Sampling
  • 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.

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Initial measurement:- all exploration and evaluaton assets shall be measured at cost.


For cost of evaluation assets incurredExtraction/evaluation assets Dr

To bank ac

For liability incurred towards restorationExtraction/evaluation assets Dr

To provision for restoration

For amortisation of intangible portion of evaluation assetsAmortisation a/c Dr

To extraction/evaluation assets (intangible)

For depreciation of tangible portion of evaluation assetsDepreciation a/c Dr

To extraction/evaluation assets (tangible)

For restoration of workProvision for restoration Dr

To bank a/c

For recognition of depn & amortisation Spl Dr

To amortisation of intangible asset
To depreciation of tangible 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


TO BANK 800000


1. Indicators

  • 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

Revaluation Dr

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

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