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When should a company in the extractive industry start accounting for its restoration costs? (4 marks)...

When should a company in the extractive industry start accounting for its restoration costs?

using Australian Accounting Standard System. ( AASB )

Business   Accounting   
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Answer #1

Answer :

The cost of restoration work necessitated by any activities after the commencement of production shall be provided for during production and shall be treated as a cost of production.

The cost of restoration work necessitated by exploration, evaluation or development activities prior to commencement of production shall be provided for at the time of such activities and shall form part of the cost of the respective phase of operations.

In determining the amount to be provided in any one financial period, the balance of the provision for restoration costs, after charging against it actual costs incurred to date, shall be reassessed in the light of expected further costs.

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