provide explanation for capitalising the expenses at evaluation and exploration stage also restoration of a oil extraction project.
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provide explanation for capitalising the expenses at evaluation and exploration stage also restoration of a oil extraction project.
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- Discuss and explain If an entity is considering revaluing its exploration and evaluation assets, would the revaluation increase the ‘relevance’ of the information from the perspective of the readers of the financial statements? Further, provide explanation for capitalising the expenses at evaluation and exploration stage also restoration of a oil extraction project. Provide reference, if possible. please.Under IFRS, research must be expensed but some development expenditures may be capitalized. To capitalize development expenditures, firms must demonstrate several factors that include all of the following except: Multiple Choice technical feasibility. length of time the intangible asset is expected to provide benefits. ability to use or sell the asset. how the intangible asset will generate probable future economic benefits.Explain the difference between the successful efforts and the full-cost methods of accounting for oil and gas exploration costs.
- Why is depreciation expense recognized? Select one: a. To provide a better estimate of the market value of the depreciated assets. b. So that the balance sheet value of plant assets will more accurately reflect the replacement cost of the assets. c. To ensure that cash will be available at the end of the assets' useful life in order to replace it. d. To match the cost of the asset against the revenue using a reasonable allocation. method. Save AnswersNextFor entities that report using IFRS, how are exploration and evaluation assets subsequently measured? Question 18 options: a) Using the cost or revaluation model. b) Using the cost model or fair value model. c) Using the cost model. d) Using the cost model or depreciation model.Initial Outlay = Cost of Asset + Installation charges + Opportunity costs of any Existing asset + any working capital required – proceeds from selling an existing asset Tax Effects The above formula was given by our tutor to calculate this. How would you treat the costs using this formaula?
- Which of the following values for an intangible asset would a company capitalize and amortize? a.) purchase price b.) research costs c.) residual value d.) development costsDetermine the period necessary to recover both the capital investment and the cost of funds required to support the investment for a project?What is the purpose of amortisation? To allocate the cost of an intangible non-current asset over its useful life To ensure that funds are available for the eventual purchase of a replacement non-current asset To reduce the cost of an intangible non-current asset in the statement of financial position to its estimated market value To account for the risk associated with intangible assets
- Explain the situation that a company (in the extractive industry) expenses all exploration and evaluation expenditure as incurred. Would the related financial reports provide ‘relevant’ information?Discuss when a company in the extractive industries needs to start accounting for its restoration costs? Explain the measurement requirement for potential restoration provisions.21. Under IFRS, research must be expensed but some development expenditures may be capitalized. To capitalize development expenditures, firms must demonstrate several factors that include all of the following except: Multiple Choice technical feasibility. ability to use or sell the asset. how the intangible asset will generate probable future economic benefits. length of time the intangible asset is expected to provide benefits.
