ABSTRACT
Extractive industries are defined as those industries involved in finding and exploiting wasting natural resources, which are those resources that cannot be replaced in their original state by human beings. Extractive industry companies are exposed to a range of financial risks, including market risk, credit risk and liquidity risk. Due to the specialised nature of the extractive industry, the Accounting Standards Review Board introduced Australian Accounting Standards Board (AASB) 1022 Accounting for the Extractive Industries in October 1989. AASB 6 is limited to the accounting treatment of exploration for and evaluation of mineral resources. Most items of property, plant and equipment employed as exploration and evaluation assets will be measured based on their historical cost in accordance with AASB 116. In accordance with paragraph 11 AASB 6, exploration for mineral or petroleum resources often involves some degree of environmental disturbance.
