If an area of interest is abandoned,which of the following actions is consistent with AASB 6 Exploration for and Evaluation of Mineral Resources?
A) Writing off the carrying amount of exploration and evaluation assets and recognising an impairment loss.
B) Reclassifying the carrying amount of exploration and evaluation assets to another other area of interest.
C) Re-instating previously written off exploration and evaluation assets.
D) Expensing machinery that can be dismantled and used on another area of interest.

Question

Quizplus · Accepted Answer

According to AASB 6, exploration and evaluation assets are required to be assessed for impairment at least annually. If an area of interest is abandoned, then the carrying amount of the exploration and evaluation assets related to that area should be written off and an impairment loss should be recognised. This is in accordance with the principle of prudence, which states that losses should be recognised as soon as they are identified, and gains should only be recognised when they are certain. Therefore, choice A is the most appropriate action to take.

If an Area of Interest Is Abandoned,which of the Following