The Accountant for a Mining Exploration Company Presents the Following

question 5

Multiple Choice

The accountant for a mining exploration company presents the following figures to the directors of the company as being possible values that could be assigned to its total non-current assets (comprising exploration and evaluation costs and purchases of plant and machinery to date) - $750 000,$1 600 000,or $2 350 000.Use of the figure $2 350 000 indicates that the company is probably using which of the following methods of accounting for exploration and evaluation costs?

• A) Expense
• B) Full-cost
• C) Successful-efforts
• D) Area-of-interest

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Definitions:

Nonrenewable

Resources or energy sources that cannot be readily replaced by natural means at a pace quick enough to keep up with consumption.

Implicit Rate

The interest rate inherent in a lease, not explicitly stated, used to determine lease payments.

Incremental Borrowing Rate

The incremental borrowing rate is the interest rate a company would have to pay if it borrows additional funds.

Major Overhaul

Significant restorations or renovations to an asset, often extending its life or improving its efficiency.