In accounting for extractive industries, AASB 6 potentially lists the alternative methods of accounting for exploration and expenditures incurred in extractive industries.

1) Would you expect the profits of an entity to be higher or lower when the full cost method of accounting than to an entity that uses the area of interest method

2) Explain with any two reasons that might influence managers or entity decisions to use either an area of interest method or full cost method of accounting.