What is the accounting for gold and silver production? Did you ever think? Is it different from other Accounting! Let us see some points:
- Unlike other ordinary goods, there is a ready liquid market with quoted prices, minimal transaction costs, minimal selling effort, minimal after-costs, and immediate cash settlement.
- Under the Conceptual Framework, an item that meets the definition of an asset, liability, income, or expense should be recognised if:
- it is probable that any future economic benefit associated with the item will flow to or from the entity; and
- the item has a cost or value that can be measured with reliability.
- The IASB concluded that because of the nature of the market in which gold and silver are bought and sold, the conditions for income recognition are met at the time of production.