• IFRS 6 permits an entity to develop an accounting policy for exploration and evaluation assets without specifically considering the requirements of paragraphs 11 and 12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Thus, an entity adopting IFRS 6 may continue to use the accounting policies applied immediately before adopting the IFRS. This includes continuing to use recognition and measurement practices that are part of those accounting policies.

• IFRS 6 requires entities recognising exploration and evaluation assets to perform an impairment test on those assets when facts and circumstances suggest that the carrying amount of the assets may exceed their recoverable amount.

• IFRS 6 varies the recognition of impairment from that in IAS 36 Impairment of Assets but measures the impairment in accordance with that Standard once the impairment is identified.

• IFRS 6 requires disclosure of information that identifies and explains the amounts recognised in its financial statements arising from the exploration for and evaluation of mineral resources, including
  • (i) its accounting policies for exploration and evaluation expenditures including the recognition of exploration and evaluation assets.
  • (ii) the amounts of assets, liabilities, income and expense and operating and investing cash flows arising from the exploration for and evaluation of mineral resources.

• IFRS 6 is effective for annual periods beginning on or after 1 January 2006. Earlier application is encouraged. If an entity adopts IFRS 6 before 1 January 2006, transitional relief is available for some comparative disclosures.

Special IAS Plus Newsletter Explaining IFRS 6

On 31 January 2005, Deloitte's IFRS Global Office published a Special Global Edition of our IAS Plus newsletter explaining IFRS 6 Exploration for and Evaluation of Mineral Resources (PDF 54k).

May 2005: Proposed Small Amendment to IFRS 6

At its April 2005 meeting, the Board discussed a proposed technical correction to IFRS1.36B to give effect to the intent of the Board as outlined in BC65, to provide relief from restating comparative information (rather than just producing comparative disclosures).

After some discussion, the Board concluded that IFRS1.36B did not correctly reflect the intention of the Board and that the correction should be made. The Board did not believe this issue warranted an exposure draft therefore, it would proceed as follows:

• Include this issue in the next IASB Update publication, as well as highlight the issue on the IASB website.
• Consider any reactions from constituents at the next Board meeting.
• Subject to comments received, the correction would be made to the literature.

The new paragraph (36B) would be as follows:

36B. An entity that adopts IFRSs before 1 January 2006 and chooses to adopt IFRS 6 Exploration for and Evaluation of Mineral Resources before 1 January 2006 need not apply the requirements of IFRS 6 to comparative information in its first IFRS financial statements.

On 2 May 2005, the IASB invited comments on a proposed small amendment to IFRS 6 and, as a consequence, an amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards. The proposed amendment would clarify that an entity that both (a) adopts IFRSs for the first time before 1 January 2006 and (b) applies IFRS 6 before that date is exempted not only from providing comparative prior-period disclosures but also from applying the recognition and measurement requirements of IFRS 6 in the prior comparative period. The Board hopes to issue the final amendment before 30 June 2005. Comment deadline is 3 June 2005.

June 2005: Amendments to IFRS 6 and IFRS 1 Adopted

On 30 June 2005 the IASB issued amendments to IFRS 1 and IFRS 6 to clarify that an entity that both (a) adopts IFRSs for the first time before 1 January 2006 and (b) applies IFRS 6 before that date is exempted not only from providing comparative prior-period disclosures but also from applying the recognition and measurement requirements of IFRS 6 in the prior comparative period.