BC32 ED 6 noted that the Board had not yet considered whether exploration and evaluation assets are tangible or intangible. Several respondents suggested that the Board should give some direction on this issue.

BC33 Some exploration and evaluation assets are treated as intangible assets (eg drilling rights), whereas others are clearly tangible (eg vehicles and drilling rigs). A tangible asset may be used in the development of an intangible one. For example, a portable drilling rig may be used to drill test wells or take core samples, clearly part of the exploration activity. To the extent that the tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is part of the cost of the intangible asset. However, using the drilling rig to develop an intangible asset does not change a tangible asset into an intangible asset.

BC34 Pending completion of the comprehensive review of accounting practices for extractive activities, the Board did not wish to decide whether and which exploration and evaluation assets should be classified as tangible or intangible. However, the Board concluded that an entity should classify the elements of exploration and evaluation assets as tangible or intangible according to their nature and apply this classification consistently. This classification is the foundation for other accounting policy choices as described in paragraphs BC29-BC31 and for the disclosures required by the IFRS.