SOLUTIONS TO WASTING ASSET
TEST EXAM QUISTION WITH
ANSWERS WELL DEFINED A+
ASSURED (LATEST UPDATE)
A Cost ANSWER Which of the following models may be applied by
entities for the measurement after recognition of exploration and
evaluation assets, in accordance with IFRS6 Exploration for and
evaluation of mineral resources?
A. Cost
B. Revaluation
C. Realization
D. Present Value
A IFRS6 does not apply IFRS6 does not apply ANSWER Does IFRS6
Exploration for and evaluation of mineral resources apply to the
following types of expenditure?
(1) The extraction and processing of mineral resources for transport to
market
(2) The commercial review of possible areas for mineral extraction
before bidding for the legal rights to explore a specific area.
Expenditure (1) Expenditure (2)
a. IFRS6 does not apply IFRS6 does not apply
b. IFRS6 does not apply IFRS6 does apply
c. IFRS6 does apply IFRS6 does not apply
,d. IFRS6 does apply IFRS6 does apply
C Oil production and gas production cash generating units combined
ANSWER The Strider Company is involved in the exploration for
mineral resources. Its policy is to recognize exploration assets and
measure them initially at cost. It is currently exploring a new gas field in
Ruritania. The exploration license for the new Ruritanian gas field is
about to expire and the Strider is now preparing to undertake an
impairment review. Strider reports its financial performance as 'Mineral
Production' and 'Energy Trading' in its financial statement in accordance
with IFRS8 Operating segments. The mineral Production segment
comprises two cash generating units- Oil production and gas production.
In accordance with IFRS6 Exploration and evaluation of mineral
resources, what is the highest level at which the impairment test can be
undertaken?
A. A cash generating unit based on the assets in the ruritarian gas field
B. Gas production cash generating unit
C. Oil production and gas production cash generating units combined
D. A cash generating unit at the strider company level
C 3,600,000 ANSWER Zambales Company acquired property in 2016
which contains mineral deposit. The acquisition cost of the property was
P20,000,000. Geological estimates indicate that 5,000,000 tons of
mineral may be extracted. It is further estimated that the property can be
sold for 5,000,000 following mineral extraction. For 2,000,000
Zambales is legally required to restore the land to a condition
appropriate for resale. After acquisition, the following cost were
incurred:
Exploration cost 13,000,000
, Development cost related
to drilling wells 10,000,000
Development cost related to production equipment 15,000,000
The company extracted 600,000 tons of the mineral in 2016 and sold
450,000 tons. In the 2016 income statement, what amount of depletion is
included in cost of sales?
A. 4,800,000 C. 3,600,000
B. 5,400,000 D. 4,050,000
C 250,000 ANSWER Natural, Incorporated embarked on a new venture
in Northern Luzon in 2016. It expects to glean 2,000,000 ounces of a
precious ore from its holdings there, over several years. Relevant data
follows:
Cost of Mineral Rights 500,000
Exploration Cost, 2016
(1/3 successful) 1,500,000
Extraction Cost, 2016 2,000,000
Ore extracted, 2016 500,000 oz
Ore sold, 2016 300,000 oz
What is depletion for 2016, using the successful efforts method of
accounting for exploration costs?
A. 350,000 C. 250,000
B. 300,00 D.150,000
TEST EXAM QUISTION WITH
ANSWERS WELL DEFINED A+
ASSURED (LATEST UPDATE)
A Cost ANSWER Which of the following models may be applied by
entities for the measurement after recognition of exploration and
evaluation assets, in accordance with IFRS6 Exploration for and
evaluation of mineral resources?
A. Cost
B. Revaluation
C. Realization
D. Present Value
A IFRS6 does not apply IFRS6 does not apply ANSWER Does IFRS6
Exploration for and evaluation of mineral resources apply to the
following types of expenditure?
(1) The extraction and processing of mineral resources for transport to
market
(2) The commercial review of possible areas for mineral extraction
before bidding for the legal rights to explore a specific area.
Expenditure (1) Expenditure (2)
a. IFRS6 does not apply IFRS6 does not apply
b. IFRS6 does not apply IFRS6 does apply
c. IFRS6 does apply IFRS6 does not apply
,d. IFRS6 does apply IFRS6 does apply
C Oil production and gas production cash generating units combined
ANSWER The Strider Company is involved in the exploration for
mineral resources. Its policy is to recognize exploration assets and
measure them initially at cost. It is currently exploring a new gas field in
Ruritania. The exploration license for the new Ruritanian gas field is
about to expire and the Strider is now preparing to undertake an
impairment review. Strider reports its financial performance as 'Mineral
Production' and 'Energy Trading' in its financial statement in accordance
with IFRS8 Operating segments. The mineral Production segment
comprises two cash generating units- Oil production and gas production.
In accordance with IFRS6 Exploration and evaluation of mineral
resources, what is the highest level at which the impairment test can be
undertaken?
A. A cash generating unit based on the assets in the ruritarian gas field
B. Gas production cash generating unit
C. Oil production and gas production cash generating units combined
D. A cash generating unit at the strider company level
C 3,600,000 ANSWER Zambales Company acquired property in 2016
which contains mineral deposit. The acquisition cost of the property was
P20,000,000. Geological estimates indicate that 5,000,000 tons of
mineral may be extracted. It is further estimated that the property can be
sold for 5,000,000 following mineral extraction. For 2,000,000
Zambales is legally required to restore the land to a condition
appropriate for resale. After acquisition, the following cost were
incurred:
Exploration cost 13,000,000
, Development cost related
to drilling wells 10,000,000
Development cost related to production equipment 15,000,000
The company extracted 600,000 tons of the mineral in 2016 and sold
450,000 tons. In the 2016 income statement, what amount of depletion is
included in cost of sales?
A. 4,800,000 C. 3,600,000
B. 5,400,000 D. 4,050,000
C 250,000 ANSWER Natural, Incorporated embarked on a new venture
in Northern Luzon in 2016. It expects to glean 2,000,000 ounces of a
precious ore from its holdings there, over several years. Relevant data
follows:
Cost of Mineral Rights 500,000
Exploration Cost, 2016
(1/3 successful) 1,500,000
Extraction Cost, 2016 2,000,000
Ore extracted, 2016 500,000 oz
Ore sold, 2016 300,000 oz
What is depletion for 2016, using the successful efforts method of
accounting for exploration costs?
A. 350,000 C. 250,000
B. 300,00 D.150,000
