The Board held its third education session on the extractive activities research project.
At this session, the project team discussed the suitability of fair value as the measurement objective in accounting for minerals and oil and gas reserves and resources. The team had consulted extensively with the project�s international advisory panel and others on the measurement of reserve and resource volumes and values. Several concerns with estimating fair value for reserves and resources were identified, in particular:
- the uncertainties inherent in the assumptions required to estimate the volume and fair value of reserves and resources; and
- the effort required to estimate fair value as at the reporting date for an entity�s reserve and resource assets in time to meet financial reporting deadlines.
The Board acknowledged difficulties in estimating fair value of reserve and resource assets. However, the Board agreed with the project team that historical cost does not provide the most relevant information for these assets. Therefore, the Board asked the project team to further research current value approaches as potential measurement bases. This research is to include consideration of current value methodologies that contain as many attributes of fair value as possible, but address the identified difficulties.
The Board also noted that it does not consider disclosing value-based information about reserves and resources is an acceptable alternative to recognition.
The Board acknowledged the contribution made by the advisory panel and other industry participants and encouraged the project team to continue to obtain further input from those parties as the project progresses.