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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 an operating segment determined in
accordance with IFRS 8 Operating Segments.
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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