The Costs-Written-Off Method Is To

question 50

Multiple Choice

The costs-written-off method is to:

• A) Write off all exploration and evaluation costs and not reinstate them if economically recoverable reserves are subsequently discovered.
• B) Write off all evaluation and development costs unless it is considered likely that economically recoverable reserves will be identified within the next financial period.
• C) Write off all exploration and evaluation costs but reinstate them if economically recoverable reserves are subsequently discovered.
• D) Write off all deferred exploration and development costs as soon as it is determined that the reserves in the area of interest are not economically recoverable.
• E) None of the given answers.

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Definitions:

Standard Quantity

The predetermined amount of materials or inputs that should be used in the production of goods or services under normal operating conditions.

Standard Price

A predetermined cost assigned to goods and services, used for budgeting, cost control, and performance evaluation purposes.

Materials Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the actual quantity used.

Standard Price

The anticipated or predetermined cost of a product, often used as a reference for evaluating actual costs.