Fiji Ltd commences operations on 1 January 2018. During 2017, Fiji Ltd explores three areas and incurs
Question:
Fiji Ltd commences operations on 1 January 2018. During 2017, Fiji Ltd explores three areas and incurs the following costs:
Exploration and evaluation expenditure
($m)
Sunshine35
Moonlight18
Planet22
In 2019 oil is discovered at Sunshine Site. Moonlight Site is abandoned. Planet Site has not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in the area of interest are continuing. In relation to the exploration and evaluation expenditures incurred at Sunshine Site and Planet Site, 70 per cent of the expenditures relate to property, plant and equipment, and the balance relates to intangibleassets.
Required:
Provide the necessary journal entries using the area-of-interest method to account for the above transactions.