Deck 40: Exploration for and Evaluation of Mineral Resources

Question 1

Which of the following would generally be considered a tangible E&E asset?

A) Drilling rights
B) Mining claims
C) Exploratory oil wells
D) None of the above

Answer 1

None of the above

Question 2

Which of the following would be considered an intangible asset?

A) A drilling rig used to create exploratory wells
B) Depreciation expense on a drilling rig used to create exploratory wells
C) A tank used to carry heavy drilling equipment
D) None of the above

Answer 2

Depreciation expense on a drilling rig used to create exploratory wells

Question 3

Capitalized E&E assets are initially measured at

A) Historical cost
B) Fair value less costs to sell
C) Fair value
D) Replacement cost

Answer 3

Historical cost

Question 4

IFRS 6 prescribes the financial reporting for expenditures incurred in

A) Pre-exploration activities
B) Exploration activities
C) Development activities
D) Evaluation activities
E) Extraction activities
F) A,B,C,D
G) A,B,D
H) B,C,D,E
I) B,D,E
J) B,E
K) B,D
L) C,E
M) D,E
N) All of the above

Question 5

When testing for impairment, several cash-generating units may be combined if

A) The combination is not larger than an operating segment.
B) The units were not previously impaired.
C) The units' exploration efforts have not discovered commercially viable possibilities.
D) There are clear indicators that the carrying amounts of the E&E assets are unlikely to be recovered.

Question 6

Unsuccessful E&E expenditures may be capitalized.

A) Always, as prescribed in IFRS 6.
B) When all successful expenditures are also capitalized.
C) When efforts to avoid similar unsuccessful efforts are disclosed in detail.
D) None of the above

Question 7

An entity should develop a policy for expensing or capitalizing their assets, and be consistent to that policy. There is no set requirement given by IFRS 6.

Question 8

Entities must choose between capitalizing all E&E expenditures or no E&E expenditures.

Question 9

An entity can and should create one standard policy for classifying all exploration and evaluation assets as either tangible or intangible assets.

Question 10

An entity must classify all E&E assets as separate classes of assets.

Question 11

Impairment is measured in accordance exclusively with standards laid out in IFRS 6.

Question 12

Intangible E&E assets are commonly revalued under the revaluation model.

Question 13

Identify the primary concern of entities operating in the extractives sector. Using the Conceptual Framework, explain why this concern is most important.

Question 14

At what point is an asset no longer considered to be an E&E asset?

Question 15

Give at least two examples of situations or circumstances that would indicate that an entity must test for impairment.