1. When testing mining assets for impairment under Statement 144, some mining entities exclude estimated cash flows associated with the economic value of a mining asset1 beyond that asset's proven and probable reserves, and those estimated cash flows may also exclude the effects of anticipated fluctuations in the future market price of minerals over the period of cash flows. As a result, some mining entities also disregard those factors when allocating the purchase price of a business combination to acquired mining assets. The primary concern is that an acquired mining asset may be subject to a 1 Mining assets include mineral properties and rights. Copyright © 2008, Financial Accounting Standards Board Not for redistribution Page 1day-two impairment if the value beyond proven and probable reserves (VBPP) and anticipated future market price increases are considered in the purchase price allocation but subsequently excluded in cash flow analyses used in an impairment test under Statement 144. The fair value of a mining asset generally includes both VBPP and a
To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.