Question

Hunter Mining Ltd has incurred the following costs during the period in relation to a specific area of interest. Its accounting policy is to capitalise all E&E costs on an area of interest basis.

Ignore GST

Salaries and other expenses of general management	$440 000
Cash paid to acquire exploration rights	86 000
Cash paid to acquire fencing materials to mark out the area-of-interest	20 000
Contractor fees for labour to set up the fencing	35 000
Diamond Ltd- non-executive directors’ fees paid	305 000
Bank Fees for banking activities associated with E & E activities	23 500
	$909 500

Required

Determine the amount of the E&E asset to be capitalised by Hunter Mining Ltd in relation to the area of interest.

Answer 1