Which of the Following Methods of Accounting for Exploration and Evaluation

question 9

Multiple Choice

Which of the following methods of accounting for exploration and evaluation costs in the extractive industries is most consistent with the provisions of Statement of Accounting Concepts and the Framework?

• A) The expense-and-reinstate method
• B) The successful-efforts method
• C) The expense (costs written-off) method
• D) The full-cost method

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Definitions:

Revenues

The complete revenue earned from selling goods or services that are fundamental to a company's core business activities.

Expenses

Monetary costs incurred in the operation of a business, leading to the creation of liabilities or decrease in assets.

Basic Accounting Equation

The fundamental equation of double-entry bookkeeping, stating that assets equal liabilities plus owner's equity.

Transaction

An agreement or exchange between two parties that has a measurable financial effect on the accounts of a business.