AASB 6 and the Conceptual Framework

Running Head: ADVANCE FINANCIAL ACCOUNTING
ADVANCE FINANCIAL ACCOUNTING
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1ADVANCE FINANCIAL ACCOUNTING
Table of Contents
AASB 6 and the Conceptual Framework...................................................................................2
Extent of Consistency between AASB 6 and the Conceptual Framework................................3
Reference....................................................................................................................................5

2ADVANCE FINANCIAL ACCOUNTING
AASB 6 and the Conceptual Framework
The determination of the accounting policy by the entity by specifying which of the
expenditure areidentifiedas asset’s evaluation and exploration and applies the policies
continuously. Hence, for determining this, there is considerations by the entity for the degree
to which, there is association of expenditure with the resources (Russell, 2017). The instances
of the expenditures,which are included in the asset’s exploration and evaluation, are as
follows:
 Acquisitions of the rights for exploring.
 Exploratory drilling
 Sampling
 Trenching
 Geophysical, geochemical, topographical and geological studies
 Activities that are in relation with the evaluation of feasibility, technical as well as
commercial viability of the extraction of the resources (Aasb.gov.au.2019).
When the entity recognizes the assets for exploration and evaluation then the direct and
indirect cost of it is allocated to specific area of interest associated with it. For allocation of
these costs, there is no distinction that is made in the cost that is incurred in the organization
and cost of the services that is performed by the consultant that is on behalf of the company
(Chen, Wright & Wu, 2018). If the leases and rights of tenure is obtained as a part of the
exploration and evaluation of the resources then their cost are included in the cost of asset’s
exploration and evaluation. Indirect cost is included in the cost for the exploration and
evaluation of assets such as depreciation of equipment (Zhou, Birt& Rankin, 2015). In
addition, general and administrative cost are included in asset’s exploration and evaluation,
however, to the extent that, the costs are related directly to the activities of the operations in