{"id":3784,"date":"2020-10-22T19:55:10","date_gmt":"2020-10-22T19:55:10","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-financialaccounting\/?post_type=chapter&#038;p=3784"},"modified":"2020-12-03T20:18:29","modified_gmt":"2020-12-03T20:18:29","slug":"reporting-natural-resources","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/chapter\/reporting-natural-resources\/","title":{"raw":"Reporting Natural Resources","rendered":"Reporting Natural Resources"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li style=\"font-weight: 400;\">Demonstrate proper financial statement presentation and disclosures related to natural resources<\/li>\r\n<\/ul>\r\n<\/div>\r\nSome companies may list investments in natural resources as a separate line item on the balance sheet itself. One thing we noticed with Albemarle Corporation is that mineral rights and reserves were listed with property, plant, and equipment.\r\n\r\n[caption id=\"attachment_6192\" align=\"aligncenter\" width=\"1024\"]<img class=\"wp-image-6192 size-large\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/17222024\/Screen-Shot-2020-11-17-at-2.20.10-PM-1024x468.png\" alt=\"See caption for link to long description.\" width=\"1024\" height=\"468\" \/> See the <a href=\"https:\/\/course-building.s3-us-west-2.amazonaws.com\/Financial+Accounting\/Long+Descriptions\/Albemarie+Note+9.txt\" target=\"_blank\" rel=\"noopener\">note long description<\/a> here.[\/caption]\r\n\r\n<a href=\"http:\/\/investors.albemarle.com\/static-files\/37d4e140-ebe0-4e7b-8d9f-7b995197ae08\">2019 Annual Report<\/a>\r\n\r\nIn addition to the amount reported on the balance sheet as part of PP&amp;E, itemized in Note 9, Albemarle included a note describing the accounting policy for significant resource development expenses:\r\n<blockquote>\r\n<h2>Resource Development Expenses<\/h2>\r\nWe incur costs in resource exploration, evaluation and development during the different phases of our resource development projects. Exploration costs incurred before obtaining legal rights to explore an area are generally expensed as incurred. After obtaining legal rights, exploration costs are expensed in areas where we have uncertainty about obtaining proven resources. In areas where we have substantial knowledge about the area and consider it probable to obtain commercially viable proven resources, exploration and evaluation costs are capitalized.\r\n\r\nIf technical feasibility studies have been obtained, resource evaluation expenses are capitalized when the study demonstrates proven or probable resources for which future economic returns are expected, while costs for projects that are not considered viable are expensed. Development costs that are necessary to bring the property to commercial production or increase the capacity or useful life are capitalized. Costs to maintain the production capacity in a property under production are expensed as incurred.\r\n\r\nCapitalized resource costs are depleted using the units-of-production method. Our resource development assets are evaluated for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.<\/blockquote>\r\nBy now, you probably recognize most of these terms and concepts.\r\n<div class=\"textbox tryit\">\r\n<h3>PRACTICE QUESTION<\/h3>\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/23797\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li style=\"font-weight: 400;\">Demonstrate proper financial statement presentation and disclosures related to natural resources<\/li>\n<\/ul>\n<\/div>\n<p>Some companies may list investments in natural resources as a separate line item on the balance sheet itself. One thing we noticed with Albemarle Corporation is that mineral rights and reserves were listed with property, plant, and equipment.<\/p>\n<div id=\"attachment_6192\" style=\"width: 1034px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-6192\" class=\"wp-image-6192 size-large\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/17222024\/Screen-Shot-2020-11-17-at-2.20.10-PM-1024x468.png\" alt=\"See caption for link to long description.\" width=\"1024\" height=\"468\" \/><\/p>\n<p id=\"caption-attachment-6192\" class=\"wp-caption-text\">See the <a href=\"https:\/\/course-building.s3-us-west-2.amazonaws.com\/Financial+Accounting\/Long+Descriptions\/Albemarie+Note+9.txt\" target=\"_blank\" rel=\"noopener\">note long description<\/a> here.<\/p>\n<\/div>\n<p><a href=\"http:\/\/investors.albemarle.com\/static-files\/37d4e140-ebe0-4e7b-8d9f-7b995197ae08\">2019 Annual Report<\/a><\/p>\n<p>In addition to the amount reported on the balance sheet as part of PP&amp;E, itemized in Note 9, Albemarle included a note describing the accounting policy for significant resource development expenses:<\/p>\n<blockquote>\n<h2>Resource Development Expenses<\/h2>\n<p>We incur costs in resource exploration, evaluation and development during the different phases of our resource development projects. Exploration costs incurred before obtaining legal rights to explore an area are generally expensed as incurred. After obtaining legal rights, exploration costs are expensed in areas where we have uncertainty about obtaining proven resources. In areas where we have substantial knowledge about the area and consider it probable to obtain commercially viable proven resources, exploration and evaluation costs are capitalized.<\/p>\n<p>If technical feasibility studies have been obtained, resource evaluation expenses are capitalized when the study demonstrates proven or probable resources for which future economic returns are expected, while costs for projects that are not considered viable are expensed. Development costs that are necessary to bring the property to commercial production or increase the capacity or useful life are capitalized. Costs to maintain the production capacity in a property under production are expensed as incurred.<\/p>\n<p>Capitalized resource costs are depleted using the units-of-production method. Our resource development assets are evaluated for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.<\/p><\/blockquote>\n<p>By now, you probably recognize most of these terms and concepts.<\/p>\n<div class=\"textbox tryit\">\n<h3>PRACTICE QUESTION<\/h3>\n<p>\t<iframe id=\"lumen_assessment_23797\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=23797&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_23797\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-3784\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Reporting Natural Resources. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":90270,"menu_order":17,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Reporting Natural Resources\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-3784","chapter","type-chapter","status-publish","hentry"],"part":792,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3784","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/users\/90270"}],"version-history":[{"count":4,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3784\/revisions"}],"predecessor-version":[{"id":6663,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3784\/revisions\/6663"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/parts\/792"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/3784\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/media?parent=3784"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=3784"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/contributor?post=3784"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/license?post=3784"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}