During the exploration of a different well site, the oil and gas division discovered a significant amount of gold. The division is now mining and selling the gold. We are trying to decide how to account for the gold inventory. We are considering valuing the gold inventory at its market price once it has been refined, even though it has not yet been sold.

Before I finalize the working papers for the auditor, the Chief Financial Officer has requested I summarize the key financial reporting issues. Where possible, he would also like to know the potential impact of the issue on the balance sheet and income statement, and he would like an explanation why an adjustment is required. If there are areas where judgment is involved, or the accounting treatment is not clear, he would like to know the alternatives that are available and factors that need to be considered in choosing an alternative.