Disclosure of unamortised exploration

expenditure of an oil company

The querist had earlier sought an opinion of the Expert Advisory Committee on whether the method of disclosure of unamortised exploration expenditure in the annual accounts of an oil exploration company immediately after “Fixed Assets”, is correct or not*.

The querist has now been advised that the earlier opinion of the Committee on the matter was titled towards disclosure of such expenditure under “Miscellaneous Expenditure” even though the Committee had also permitted the disclosure thereof as ‘fixed assets’, provided the said expenditure is properly amortised and the accounting policy in that regard is disclosed.

Opinion January 9, 1986

1. The Expert Advisory Committee considered the above mentioned view as well as the earlier opinion of the Committee.

2.The Committee reiterates that the unamortised exploration expenditure of a mineral oil company can be disclosed in either of the ways stated in para 4 of its earlier opinion i.e. disclosure under the head “Miscellaneous Expenditure” or under “Fixed Assets” (provided the said expenditure is properly amortised) and that in either case the accounting policy in this regard should be disclosed clearly.

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* Query No. 1.7 of Volume IV of the Compendium of Opinions (page IV-12)