Question
Fiji Ltd commences operations on 1 January 2018. In 2017, Fiji Ltd explores three areas and incurs the following costs Exploration and evaluation expenditure ($m)
Fiji Ltd commences operations on 1 January 2018. In 2017, Fiji Ltd explores three areas and incurs the following costs
Exploration and evaluation expenditure
($m)
Villa 35
Mill. 18
Star. 22
In 2019 oil is discovered at villa Site. mill Site is abandoned. Star 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 related to property, plant, and equipment, and the balance relates to intangible assets.
Required:
Provide the necessary journal entries using the area-of-interest method to account for the above transactions.
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