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Commission Regulation
(EC) No 1910/2005 of 08 November 2005
amending
Regulation (EC) No 1725/2003.
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Presentation
Classification of exploration and evaluation assets
15. An entity
shall classify exploration and evaluation assets as
tangible or intangible according to the nature of the
assets acquired and apply the classification
consistently.
16. Some
exploration and evaluation assets are treated as
intangible (e.g. drilling rights), whereas others are
tangible (e.g. vehicles and drilling rigs). To the
extent that a tangible asset is consumed in developing
an intangible asset, the amount reflecting that
consumption is part of the cost of the intangible asset.
However, using a tangible asset to develop an intangible
asset does not change a tangible asset into an
intangible asset.
Reclassification of exploration and evaluation
assets
17. An
exploration and evaluation asset shall no longer be
classified as such when the technical feasibility and
commercial viability of extracting a mineral resource
are demonstrable. Exploration and evaluation assets
shall be assessed for impairment, and any impairment
loss recognised, before reclassification.
Impairment
Recognition
and measurement
18.
Exploration and evaluation assets shall be assessed for
impairment when facts and circumstances suggest that the
carrying amount of an exploration and evaluation asset
may exceed its recoverable amount. When facts and
circumstances suggest that the carrying amount exceeds
the recoverable amount, an entity shall measure, present
and disclose any resulting impairment loss in accordance
with IAS 36, except as provided by paragraph 21 below.
19. For the
purposes of exploration and evaluation assets only,
paragraph 20 of this IFRS shall be applied rather than
paragraphs 8 to 17 of IAS 36 when identifying an
exploration and evaluation asset that may be impaired.
Paragraph 20 uses the term ‘assets’ but applies equally
to separate exploration and evaluation assets or a
cash-generating unit.
20. One or
more of the following facts and circumstances indicate
that an entity should test exploration and evaluation
assets for impairment (the list is not exhaustive):
(a) the
period for which the entity has the right to explore
in the specific area has expired during the period
or will expire in the near future, and is not
expected to be renewed;
(b)
substantive expenditure on further exploration for
and evaluation of mineral resources in the specific
area is neither budgeted nor planned;
(c)
exploration for and evaluation of mineral resources
in the specific area have not led to the discovery
of commercially viable quantities of mineral
resources and the entity has decided to discontinue
such activities in the specific area;
(d)
sufficient data exist to indicate that, although a
development in the specific area is likely to
proceed, the carrying amount of the exploration and
evaluation asset is unlikely to be recovered in full
from successful development or by sale.
In any such
case, or similar cases, the entity shall perform an
impairment test in accordance with IAS 36. Any
impairment loss is recognised as an expense in
accordance with IAS 36.
Specifying the level at which exploration and
evaluation assets are assessed for impairment
21. An
entity shall determine an accounting policy for
allocating exploration and evaluation assets to
cashgenerating units or groups of cash-generating units
for the purpose of assessing such assets for impairment.
Each cash-generating unit or group of units to which an
exploration and evaluation asset is allocated shall not
be larger than a segment based on either the entity’s
primary or secondary reporting format determined in
accordance with IAS 14 Segment Reporting.
22. The level
identified by the entity for the purposes of testing
exploration and evaluation assets for impairment may
comprise one or more cash-generating units.
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