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Unformatted text preview: eir first IFRS financial statements without having to revisit all previous accounting for these items. For more information on the reliefs available on the adoption of IFRS, we recommend that you refer to KPMG's publication IFRS Handbook: First-time Adoption of IFRS. Capitalisation of E&E expenditure IFRS 6 relaxes asset recognition requirements for E&E expenditure Without the benefit of IFRS 6, expenditure would not be recognised as an asset unless it is probable that it will give rise to future economic benefits. This would mean that expenditure on an exploration activity likely would be expensed until the earlier of the time at which: the estimated fair value less costs to sell of the exploration prospect is positive; and it is determined that commercial reserves are present. 2011 KPMG International Cooperative ("KPMG International"). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 2011 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. 6 Impact of IFRS: Oil and Gas 2011 KPMG International Cooperative ("KPMG International"). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 2011 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Impact of IFRS: Oil and Gas 7 Discussion Paper Extractive Activities The Discussion Paper supported a separate accounting model for E&E costs in extractive industries. The views of respondents varied significantly on the approach that the IASB should take, and on the asset recognition model. The project team's proposals relating to E&E assets included the following. A single accounting approach for both minerals and oil and gas extractive activities. Recognition of an asset on the acquisition of legal rights and capitalisation of all subsequent expenditure as part of that asset. This includes expenditure that may be expensed currently. Three possible measurement bases for asse...
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This note was uploaded on 12/03/2012 for the course ACCOUNTING 102-1132 taught by Professor Accountinggroup during the Fall '11 term at Al-Quds University.

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