BC36 In some cases, and particularly in exploration‑only entities, exploration and evaluation assets do not generate cash flows and there is insufficient information about the mineral resources in a specific area for an entity to make reasonable estimates of exploration and evaluation assets' recoverable amount. This is because the exploration for and evaluation of the mineral resources has not reached a stage at which information sufficient to estimate future cash flows is available to the entity. Without such information, it is not possible to estimate either fair value less costs to sell or value in use, the two measures of recoverable amount in IAS 36. Respondents noted that this would lead to an immediate write‑off of exploration assets in many cases.

BC37 The Board was persuaded by respondents' arguments that recognising impairment losses on this basis was potentially inconsistent with permitting existing methods of accounting for exploration and evaluation assets to continue. Therefore, pending completion of the comprehensive review of accounting for extractive activities, the Board decided to change the approach to recognition of impairment; the assessment of impairment should be triggered by changes in facts and circumstances. However, it also confirmed that, once an entity had determined that an exploration and evaluation asset was impaired, IAS 36 should be used to measure, present and disclose that impairment in the financial statements, subject to special requirements with respect to the level at which impairment is assessed.