Reference no: EM132793524

Question - Gravelstone Resources explores, develops, and produces aluminum.

The company has a December 31 year-end and the company follows IFRS. During 2017, the company engaged in the following activities.

1. Athena: Produced and sold 34,000 tonnes of aluminum, leaving reserves of 167,000 tonnes at the end of 2017. The average selling price per tonne was $1,150 while operating costs were $18 million at Athena. Intangible exploration costs that remain unamortized at the end of 2016 amounted to $29 million, while undepreciated tangible development costs totalled $18 million.

2. Billow Valley: Gravelstone spent the entire year and $10 million developing this mine site. However, it was not yet ready for production by the end of 2017.

3. Chen Chuck: Gravelstone began exploring this area for aluminum deposits in April 2017. By December 31, the company had spent $4.8 million on geological tests and core samples. However, whether Chen Chuck will have sufficient concentrations of aluminum to be productive remains uncertain at year-end.

4. Delgon Ridge: Gravelstone also explored this area in July 2017. By November, the company had spent $1.9 million on geological tests and core samples. Due to results that did not look promising, the company ceased further exploration in the area.

5. Research and development project: Gravelstone was also actively engaged in developing a new way to determine the existence of aluminum deposits in a particular location. In 2017, the company spent $14 million on this project. However, the company has not yet been able to demonstrate that its approach is any more effective than existing technologies.

Required - Record the journal entries relating to the transactions. Assume that Gravelstone follows IFRS and has a policy of capitalizing the costs of exploration and evaluation. Ensure that the names of accounts clearly identify whether it is an asset or an expense.