The full-cost method of accounting for exploration and evaluation costs in the extractive industries:

Question

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The full-cost method requires that all exploration and evaluation costs be capitalised as assets on the balance sheet. This includes both successful and unsuccessful exploration activities. The asset value will represent the costs incurred in exploring for minerals, which closely approximates the potential value of any mineral deposits discovered in the future. This method allows for more efficient cost recognition and reporting, as all exploration costs are deferred until the discovery of a commercially viable mineral deposit.

The Full-Cost Method of Accounting for Exploration and Evaluation Costs