BC10 Respondents seemed to be concerned that the Board was extending the scope of the proposals to include expenditures incurred before the acquisition of legal rights to explore in a specific area in the definition of exploration and evaluation expenditure. Some were concerned that such an extension would open the way for the recognition of such expenditures as assets; others preferred this result. In drafting IFRS 6, the Board could not identify any reason why the Framework was not applicable to such expenditures.

BC11 The Board decided not to define pre‑acquisition or pre‑exploration expenditures. However, the IFRS clarifies that expenditures before the entity has obtained legal rights to explore in a specific area are not exploration and evaluation expenditures and are therefore outside the scope of the IFRS.

BC12 The Board noted that an appropriate application of IFRSs might require pre‑acquisition expenditures related to the acquisition of an intangible asset (eg expenditures directly attributable to the acquisition of an exploration licence) to be recognised as part of the intangible asset in accordance with IAS 38. Paragraph 27(a) of IAS 38 states that the cost of a separately acquired intangible asset comprises its purchase price, including import duties and non‑refundable purchase taxes, and some directly attributable costs.