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.

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

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.

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

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?

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

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.

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.

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.

Under PFRS 7, an entity shall disclose the fair value of financial assets in order to enable users of financial statements to assess an entity's credit risk exposure and understand its significant credit risk concentrations.

When an entity obtains financial or non-financial assets during the period by taking possession of collateral it holds as security, the disclosures of fair value are not required.

Disclosure on Qualitative characteristics of the financial instruments describes how the company is exposed to the risks, how the risks arise and how it manages these risks.

According to PFRS 8, start-up operations may be operating segments before earning revenues.

According to PFRS 8, disclosures for major customer shall be provided if revenues from transactions with a single external customer amount to at least 75% of the entity's total revenue.

Operating segments may be aggregated if they have the same chief operating decision maker.

PFRS 8 shall not be applied to the separate or individual financial statements of an entity whose debt or equity instruments are not traded in a public market.

When both the consolidated financial statements and the parent’s separate or individual financial statements are contained in the same financial report, segment information is only required in both consolidated financial statements and parent’s separate financial statements.

An industry segment is considered reportable segment when its segment liabilities are 10% or more of the combined liabilities of all segments.

Operating Segments that do not meet any of the quantitative thresholds may be considered reportable and separately disclosed of this is the practice within the economic environment.