How to capitalize exploration assets
Records the capitalization of costs associated with the search for mineral resources before technical feasibility is demonstrated.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Exploration and Evaluation Assets | Debit | 50,000.00 | - |
| Cash | Credit | - | 50,000.00 |
💡 Accountant's Note
Under IFRS 6, entities can capitalize costs incurred in the exploration for and evaluation of mineral resources as intangible assets until technical feasibility and commercial viability are demonstrated.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a work-in-progress (WIP) asset class specifically for E&E assets to prevent automatic depreciation.
⚠️ Audit Flags
Consistency of capitalization policy and subsequent impairment testing once feasibility is proven.
📄 Required Documentation
Geological survey reports, drilling permits, and expenditure invoices.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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