Deloitte Touche Tohmatsu comments on extractive industries

  • News default Image

09 Oct 2001

We have posted the (PDF 136k).

Click here for Project Information. Our basic position:
  • We strongly support the development of an international accounting standard for mining and oil and gas companies.
  • At the current time, an historical cost concept is more appropriate for accounting for the extractive industries than a model of accounting based on an estimate of the fair values of mineral properties and reserves.
  • Within the context of an historical cost model, there is an urgent need to achieve consistency in recognition, measurement, and subsequent depreciation of extractive industry related assets, particularly pre-production expenditure. We favour the following treatment of pre-production costs:
    • Preacquisition prospecting and exploration: Charge to expense
    • Property acquisition (direct and incidental): Capitalise
    • Post-acquisition exploration: Capitalise
    • Evaluation or appraisal costs: Capitalise
    • Development cost: Capitalise
    • Construction cost: Capitalise
    • All capitalised costs are subject to depreciation and an impairment test based on disposal value of the acquired rights

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.