Viewpoints: Accounting for farm-out arrangements in the exploration and evaluation phase (Oil & gas)

Learn how an organization accounts for the reduction of its interest in an oil and natural gas property in the exploration and evaluation phase as a result of a farm-out arrangement.

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If your company has provided a working interest in its oil and natural gas property to a third party through a farm-out arrangement, you may be wondering: How do I account for the reduction in our interest in the project in the E&E phase?

Prepared by Chartered Professional Accountants of Canada (CPA Canada), the Canadian Association of Petroleum Producers, and the Small Explorers and Producers Association of Canada, Viewpoints: Applying IFRS in the Oil and Gas Industry: Farm-out Arrangements in the Exploration and Evaluation Phase discusses how to develop an appropriate accounting policy and features information on:

  • International Financial Reporting Standard (IFRS) 6 Exploration for and Evaluation of Mineral Resources, and its temporary exemption relating to E&E assets
  • the most common accounting policy that deals with E&E assets in farm-out arrangements


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