The correct answer is: B. cost model to the exploration and evaluation assets
Exploration and evaluation assets are intangible assets that are used in the exploration for and evaluation of mineral resources. After recognition, an entity applies the cost model to these assets. This means that the assets are carried at cost less any accumulated impairment losses.
The cost model is applied because exploration and evaluation assets are typically highly uncertain in nature and their future economic benefits are difficult to measure reliably. The cost model provides a more conservative approach to accounting for these assets.
The revaluation model is not applied to exploration and evaluation assets because it would not be appropriate given the high level of uncertainty associated with these assets. The revaluation model is based on the assumption that the fair value of an asset can be reliably measured. However, this is not the case for exploration and evaluation assets.
Therefore, the cost model is the appropriate accounting treatment for exploration and evaluation assets.
Here is a brief explanation of each option:
- Option A: revaluation model to the exploration and evaluation assets. This option is not correct because the revaluation model is not applied to exploration and evaluation assets.
- Option B: cost model to the exploration and evaluation assets. This option is correct because the cost model is the appropriate accounting treatment for exploration and evaluation assets.
- Option C: Either A or B. This option is not correct because the revaluation model is not applied to exploration and evaluation assets.
- Option D: Both A and B. This option is not correct because the revaluation model is not applied to exploration and evaluation assets.