Question 1

Accounting policies for exploration and evaluation costs should be determined:

Accepted Answer

A)   in accordance with AASB 6.
B)   in accordance with AASB 108.
C)   in accordance with AASB 106.
D)   in accordance with AASB 8.E) None of the above
F) A) and C)

Question 2

Which of the following are included in AASB 6/IFRS 6 as factors indicating the E&E assets may be impaired?
I - Whether the exploration rights for the specific area have expired or are expected to expire in the near future and there is no expectation of renewal.
II - Where there is no budget or plan for the incurrence of further substantial E&E expenditure in the specific area.
III - Where the entity had decided to discontinue E&E activities in the specific area on the basis that such activities have not led to the discovery of commercially viable quantities of mineral resources.
IV - Where the entity has established that the cost of the E&E asset is unlikely to be recovered in full from the successful development or sale of the specific area.

Accepted Answer

A)   I, II and III.
B)   I, II and IV.
C)   I, III and IV.
D)   II, III and IV.E) A) and D)
F) All of the above

Question 3

In the context of AASB 6/IFRS 6, E&E stands for:

Accepted Answer

A)   evaluation and extraction.
B)   exploration and evaluation.
C)   extraction and exploration.
D)   exploration and expenditure.E) B) and C)
F) All of the above

Question 4

Which costs are within the scope of AASB 6?

Accepted Answer

A)   Pre-exploration and evaluation phase expenditure.
B)   Exploration and evaluation phase expenditure.
C)   Development phase expenditure.
D)   All of the options listed.E) C) and D)
F) B) and D) B

Question 5

Which of the following is NOT within the scope of the IASB extractive activities project?

Accepted Answer

A)   The definition of reserves and resources.
B)   Whether to expense or capitalise costs recognised after recognition of reserves and resources as assets.
C)   Measurement of reserves and resources on initial recognition as an asset.
D)   Disclosure requirements for reserves and resources.E) A) and D)
F) B) and C)

Question 6

Which of the following statements in relation to assessing E&E assets for impairment is correct?

Accepted Answer

A)   The level at which and E&E asset is tested for impairment may consist of one or more cash-generating units
B)   AASB 6/IFRS 6 allows the cash-generating unit or group of cash-generating units to which an E&E asset is allocated to be larger than a segment determined in accordance with IFRS 8.
C)   AASB 6/IFRS 6 allows E&E assets to be tested for impairment at the individual asset level
D)   AASB 6/IFRS 6 does not allow the reversal of impairment write-downs made against E&E assetsE) B) and C)
F) A) and C)

Question 7

AASB 6/IFRS 6 is an example of:

Accepted Answer

A)   an industry specific standard.
B)   a not-for-profit standard.
C)   a standard applicable to disclosing entities.
D)   a differential reporting standard based on size based criteria.E) All of the above
F) B) and C)

Question 8

The scope of AASB 6 is limited to:

Accepted Answer

A)   exploration and evaluation expenditures.
B)   pre-exploration, exploration and evaluation expenditures.
C)   exploration, evaluation and development expenditures.
D)   pre-exploration, exploration, evaluation and development expenditures.E) B) and D)
F) B) and C)

Question 9

The entry to record an obligation for removal and restoration incurred during the exploration and evaluation (E&E)  phase of a mining project is:

Accepted Answer

A)   DR E&E asset xx CR E&E expense xx
B)   DR E&E expense xx CR Provision for removal and restoration xx
C)   DR Removal and restoration expense xx CR E&E asset xx
D)   DR E&E asset xx CR Provision for removal and restoration xxE) A) and B)
F) C) and D)

Question 10

Which of the following E&E costs would be classified as intangibles?
I - Drilling rights.
II - Equipment inspection costs.
III - Exploration licenses.
IV - Capitalised consumable costs.

Accepted Answer

A)   I, II and III.
B)   II, III and IV.
C)   I, II and IV.
D)   I, III and IV.E) B) and C)
F) A) and D)

Question 11

Subsequent to initial recognition E&E assets are required to be measured:

Accepted Answer

A)   under the cost model.
B)   under the revaluation model.
C)   either under the cost model or revaluation model.
D)   at the lower of the cost and fair value.E) None of the above
F) All of the above

Question 12

The majority of an entity's obligations for removal and restorations costs are incurred during which phase of a project?

Accepted Answer

A)   Exploration phase.
B)   Technical feasibility phase.
C)   Development phase.
D)   Evaluation phase.E) B) and D)
F) B) and C)

Question 13

Which of the following statements in relation to the use of the revaluation model to subsequently account for E&E assets is correct?

Accepted Answer

A)   The revaluation model can only be used to account for tangible E&E assets.
B)   The revaluation model can be used for intangible E&E assets where the fair value can be reliably measured.
C)   The revaluation model can be used for tangible E&E assets only where there is an active market for the assets.
D)   The revaluation model can be used for tangible E&E assets where the fair value can be reliably measured.E) None of the above
F) A) and B)

Question 14

Accounting for the acquisition of equipment to be used in the extraction of mineral resources is covered by:

Accepted Answer

A)   AASB 6.
B)   AASB 108.
C)   AASB 116.
D)   AASB 138.E) None of the above
F) B) and C)

Question 15

Which of the following methods best reflects the volatility inherent in E&E activities?

Accepted Answer

A)   The area of interest method.
B)   The successful efforts method.
C)   The appropriation method.
D)   The full cost method.E) B) and C)
F) A) and C)

Question 16

The IFRS Interpretations Committee issued an interpretation in relation to the accounting for surface mine stripping costs (i.e. removal of rocks, soil and other waste materials to access the relevant mineral deposits)  incurred during the production phase. The interpretation proposes:

Accepted Answer

A)   waste removal (stripping)  costs would be capitalised during the production phase of a surface mine, if certain criteria are met.
B)   this asset would be referred to as a stripping activity asset ('the asset') .
C)   the asset would initially be recognised at cost plus directly attributable overhead costs.
D)   all of the options are correct.E) C) and D)
F) All of the above D

Question 17

Which of the following is NOT included as part of the initial cost of exploration and evaluation assets?

Accepted Answer

A)   Exploratory drilling.
B)   Mining acquisition rights.
C)   Trenching.
D)   Pre-exploration survey fees.E) A) and C)
F) B) and C)

Question 18

The obligation to record a provision for removal and restoration costs arising from mining exploration and evaluation arises through the application of:

Accepted Answer

A)   AASB 6.
B)   AASB 137.
C)   The Framework.
D)   IFRIC 1.E) A) and D)
F) B) and C)

Question 19

Which of the following methods involves capitalising exploration and evaluation costs using a larger cost centre than an area of interest such as a country of region?

Accepted Answer

A)   The area of interest method.
B)   The successful efforts method.
C)   The appropriation method.
D)   The full cost method.E) A) and B)
F) A) and C) D

Question 20

Which of the following methods best reflects the traditional concept of an asset?

Accepted Answer

A)   The area of interest method.
B)   The successful efforts method.
C)   The appropriation method.
D)   The full cost method.E) B) and C)
F) C) and D)

Exam 34: Accounting for Mineral Resources

Accounting policies for exploration and evaluation costs should be determined:

Correct Answer
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In the context of AASB 6/IFRS 6, E&E stands for:

Correct Answer
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Which costs are within the scope of AASB 6?

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B

Which of the following is NOT within the scope of the IASB extractive activities project?

Correct Answer
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Which of the following statements in relation to assessing E&E assets for impairment is correct?

Correct Answer
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AASB 6/IFRS 6 is an example of:

Correct Answer
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The scope of AASB 6 is limited to:

Correct Answer
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The entry to record an obligation for removal and restoration incurred during the exploration and evaluation (E&E) phase of a mining project is:

Correct Answer
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Which of the following E&E costs would be classified as intangibles? I - Drilling rights. II - Equipment inspection costs. III - Exploration licenses. IV - Capitalised consumable costs.

Correct Answer
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Subsequent to initial recognition E&E assets are required to be measured:

Correct Answer
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The majority of an entity's obligations for removal and restorations costs are incurred during which phase of a project?

Correct Answer
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Which of the following statements in relation to the use of the revaluation model to subsequently account for E&E assets is correct?

Correct Answer
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Accounting for the acquisition of equipment to be used in the extraction of mineral resources is covered by:

Correct Answer
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Which of the following methods best reflects the volatility inherent in E&E activities?

Correct Answer
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The IFRS Interpretations Committee issued an interpretation in relation to the accounting for surface mine stripping costs (i.e. removal of rocks, soil and other waste materials to access the relevant mineral deposits) incurred during the production phase. The interpretation proposes:

Correct Answer
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D

Which of the following is NOT included as part of the initial cost of exploration and evaluation assets?

Correct Answer
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The obligation to record a provision for removal and restoration costs arising from mining exploration and evaluation arises through the application of:

Correct Answer
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Which of the following methods involves capitalising exploration and evaluation costs using a larger cost centre than an area of interest such as a country of region?

Correct Answer
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D

Which of the following methods best reflects the traditional concept of an asset?

Correct Answer
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Exam 34: Accounting for Mineral Resources

Accounting policies for exploration and evaluation costs should be determined:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the context of AASB 6/IFRS 6, E&E stands for:

Correct AnswerverifiedShow Answer

Which costs are within the scope of AASB 6?

Correct AnswerverifiedB

Which of the following is NOT within the scope of the IASB extractive activities project?

Correct AnswerverifiedShow Answer

Which of the following statements in relation to assessing E&E assets for impairment is correct?

Correct AnswerverifiedShow Answer

AASB 6/IFRS 6 is an example of:

Correct AnswerverifiedShow Answer

The scope of AASB 6 is limited to:

Correct AnswerverifiedShow Answer

The entry to record an obligation for removal and restoration incurred during the exploration and evaluation (E&E) phase of a mining project is:

Correct AnswerverifiedShow Answer

Which of the following E&E costs would be classified as intangibles? I - Drilling rights. II - Equipment inspection costs. III - Exploration licenses. IV - Capitalised consumable costs.

Correct AnswerverifiedShow Answer

Subsequent to initial recognition E&E assets are required to be measured:

Correct AnswerverifiedShow Answer

The majority of an entity's obligations for removal and restorations costs are incurred during which phase of a project?

Correct AnswerverifiedShow Answer

Which of the following statements in relation to the use of the revaluation model to subsequently account for E&E assets is correct?

Correct AnswerverifiedShow Answer

Accounting for the acquisition of equipment to be used in the extraction of mineral resources is covered by:

Correct AnswerverifiedShow Answer

Which of the following methods best reflects the volatility inherent in E&E activities?

Correct AnswerverifiedShow Answer

The IFRS Interpretations Committee issued an interpretation in relation to the accounting for surface mine stripping costs (i.e. removal of rocks, soil and other waste materials to access the relevant mineral deposits) incurred during the production phase. The interpretation proposes:

Correct AnswerverifiedD

Which of the following is NOT included as part of the initial cost of exploration and evaluation assets?

Correct AnswerverifiedShow Answer

The obligation to record a provision for removal and restoration costs arising from mining exploration and evaluation arises through the application of:

Correct AnswerverifiedShow Answer

Which of the following methods involves capitalising exploration and evaluation costs using a larger cost centre than an area of interest such as a country of region?

Correct AnswerverifiedD

Which of the following methods best reflects the traditional concept of an asset?

Correct AnswerverifiedShow Answer

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B

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D

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D

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