The Differences Between the Treatment That Would Be Most Consistent

question 45

Multiple Choice

The differences between the treatment that would be most consistent with the AASB Framework and the method required by AASB 6 for the treatment of pre-production costs include:

• A) The AASB Framework requires future benefits to be probable so virtually all exploration and evaluation costs would be written off. Under AASB 1022 these costs may be reinstated if economically viable reserves are discovered.
• B) AASB 6 requires future benefits to be probable so virtually all exploration and evaluation costs are to be written off. Under the AASB Framework these costs may be reinstated if economically viable reserves are discovered.
• C) The AASB Framework requires future benefits to be probable so virtually all exploration and evaluation costs would initially be written off and only reinstated when economically viable reserves had been discovered. AASB 6 allows the capitalisation of these costs provided active and significant operations in the area are continuing.
• D) AASB 6 requires future benefits to be likely and permits the capitalisation of exploration and evaluation costs to the extent that this requirement is met and there are continuing operations in the area of interest. The AASB Framework would require the future benefit to be probable and so the two sources of regulations would result in very similar outcomes in terms of asset and expense recognition.
• E) None of the given answers.

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Definitions:

Organizational Structures

The formal system of task and reporting relationships that controls, coordinates, and motivates employees so that they cooperate and work together to achieve an organization’s goals.

Idea-Generation

The process of creating, developing, and communicating new concepts or solutions.

Defying Orders

The act of refusing to obey direct instructions or commands from a superior or authority figure.

Extrinsic Rewards

Benefits provided by an external source, such as money, grades, or praise, that motivate individuals to perform tasks.