BC40 When it developed ED 6, the Board decided that there was a need for consistency between the level at which costs were accumulated and the level at which impairment was assessed. Without this consistency, there was a danger that expenditures that would form part of the cost of an exploration and evaluation asset under one of the common methods of accounting for the exploration for and evaluation of mineral resources would need to be recognised in profit or loss in accordance with IAS 36. Consequently, ED 6 proposed that an entity recognising exploration and evaluation assets should make a one‑time election to test those assets either at the level of the IAS 36 cash‑generating unit (CGU) or at the level of a special CGU. ED 6 explained that any assets other than exploration and evaluation assets included within the special CGU should continue to be subject to separate impairment testing in accordance with IAS 36, and that impairment test should be performed before the special CGU was tested for impairment.

BC41 Respondents disagreed with the Board's proposal. In particular, and for various reasons, they did not accept that the special CGU would provide the relief it was intended to provide, because:

(a) small, start‑up or exploration‑only entities might not have adequate cash flows to support exploration and evaluation assets that were not cash‑generating.