Question 1:

Explain how the lease liability and a right-of-use asset would be recognised and measured at the lease inception? Explain the typical expenses recognised by a lease during lease period.

Question 2:

Discuss (Using Australian accounting standard) If a decision is made to abandon an area of interest, how should any pre-production costs in respect of that area be treated? Explain, what costs should be included in the cost of inventory of an entity involved in the extractive industries.