Which of the following methods of accounting for exploration and evaluation costs in the extractive industries is most consistent with the provisions of Statement of Accounting Concepts and the Framework?

Question

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The expense-and-reinstate method is considered the most consistent with the Statement of Accounting Concepts and the Framework. This method requires that all exploration and evaluation costs be expensed in the period incurred, except for those costs related to successful discoveries. These successful discoveries are capitalized and then amortized over the life of the related assets. Any unsuccessful exploration and evaluation costs are reinstated and then expensed in a subsequent period. This method provides a more conservative approach to accounting for exploration and evaluation costs and is consistent with the principles of prudence and reliability.

Which of the Following Methods of Accounting for Exploration and Evaluation