PFRS 6, 7 and 8

Costs directly related to acquiring the legal title, that permits exploration and evaluation activities to be carried out, are capitalized.

• TRUE

• FALSE

Under the successful Efforts approach, in general only those costs that lead directly to the discovery, acquisition, or development of specific, discrete mineral reserves are capitalized.

• TRUE

• FALSE

Seismic costs, which are geological and geophysical costs, are generally expensed as incurred.

• TRUE

• FALSE

Generally, the acquisition costs of natural resources is recorded in an account titled "Undeveloped property". Later assigns that cost if the exploration is SUCCESSFUL. If UNSUCCESSFUL, it writes off the acquisition costs as IMPAIRMENT LOSS.

• TRUE

• FALSE

Pre-license costs fall within the scope of exploration and evaluation expenditure.

• TRUE

• FALSE

An entity is in the process of carrying out exploration and evaluations activities in a geographic area that it regards as an overall single exploration

area. It has an accounting policy of capitalizing exploration and evaluations expenditure. Costs are incurred on a test drilling a well that ultimately

proves to be a ‘dry well’.

Required: Are these costs eligible to be capitalized into the entity’s exploration and evaluations asset?

• YES

• NO

PFRS 7 applies to contracts to buy or sell a non-financial item that are outside the scope of PFRS 9.

• TRUE

• FALSE

In disclosing fair values in accordance with PFRS 7, an entity shall group financial assets and financial liabilities into classes, but Shall offset them only to the extent that their carrying amounts are offset in the statement of financial position.

• TRUE

• FALSE

An entity shall disclose the contractual amount outstanding on financial assets that were written off during the reporting period and is not a subject to enforcement activity.

• TRUE

• FALSE

Credit Risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

• TRUE

• FALSE