If Expenditures in Any of the Five Phases of the Extractive

question 16

Multiple Choice

If expenditures in any of the five phases of the extractive industry are not considered likely to lead to an economically viable project:

• A) A post-balance-date adjustment to the amounts recorded as assets in the earlier period should be made to recognise that they were not assets at that time.
• B) The costs should be written off against a reserve created by revaluing the non-current assets held in relation to projects based on a similar natural substance.
• C) The costs should be deferred and amortised against the total revenue earned from all projects based on a similar natural substance.
• D) The costs should be written off as a loss.
• E) None of the given answers.

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Definitions:

Accounts Receivable Period

measures the average number of days it takes a company to collect payment after a sale has been made, indicating the efficiency of its credit policies.

Cost of Goods Sold

Represents the total cost directly tied to the production or acquisition of the goods sold by a company during a specific period.

Sales

The activities involved in selling goods or services in return for money or other compensation, serving as a primary revenue source for businesses.

Inventory

The raw materials, work-in-progress goods, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.