Gaap Ifrs And Ifrs For Extractive Activities

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To: File From: Julie Kang Date: October 29, 2015 Subject: GAAP-IFRS Conversion- Extractive Activities Executive Summary This memo provides guidance on what changes will be required to convert the statements from GAAP to IFRS for extractive activities. The first thing that I will cover is the the current treatment under GAAP, followed by the treatment required under IFRS. After that I will talk about how the company can convert its current statement from GAAP to IFRS. Thereafter I will provide an example for GAAP, which will be followed by an example of the conversion to GAAP to IFRS. Concluding with to make a recommendation for the appropriate treatment to convert them from GAAP to IFRS. Current treatment under GAAP Under US GAAP,…show more content…
Lastly the guidance on production stripping applies to all extractive activities other than oil and gas. The stripping costs incurred during the production phase of a mine are included in the cost of inventory extracted during the period. Treatment required under IFRS The treatment required under IFRS is that it provides specialised extractive industry guidance only in respect of expenditure incurred on exploration for and evaluation of (E&E) mineral resources after obtaining a legal right to explore and before achieving technical feasibility and commercial viability. There is no industry-specific guidance on the recognition or measurements of pre-exploration expenditure or development expenditure. Pre-E&E expenditure is generally expensed as it is incurred. Entities identify and account for pre-exploration expenditure, E&E expenditure and development expenditure separately. Each type of E&E cost may be expensed as it is incurred or capitalised, in accordance with the entity’s selected accounting policy. Capitalised E&E costs are classified as either tangible and intangible assets, according to their nature. The test for recoverability of E&E assets can combine several cash-generating units, as long as the combination is not larger than an operating segment. Stripping costs incurred during the production phase of surface mining are included in the cost of inventory extracted during the period, if appropriate, or are capitalised as a non-current asset if they

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