Hi,
I have a query, One company is engaged in mining business, and it has went for Gold Mining Project, during the research period they have expensed off all the expenses as per AS-26, now it is in devlopement period but has not started production yet.
Now my question is during devlopement time whatever expenses incurred by company it has to be capitalised, but we cannot show it as a Deferred Revenue Expenditure (DRE) as after applicability of AS-26 the concept of DRE is abolished.
Now the option remains to treat it as a Intangible asset as per AS-26 but again in AS-26 it has specifically prescribed that standard will not applicable to "the expenditure incurred on the exploration for or devlopement of oil, gas or mineral deposits and mineral rights. However the standard applies to START UP cost in extractive industries".
Now how to deal with the cost incurred during devlopement period ?? We cannot directly write it off to P/L as it is not cost incurred at the time of research, nor can we treat it as an Intangible Asset, so how to disclose those capitalised expenses in Balance sheet?
I would appreciate if someone can help me with this query.
Abhishek Jain
CAclubindia
