ASC

ASC 330-930

Extractive Activities—Mining

330 Inventory

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In brief

IntermediateInventory and PP&EInitial measurementIndustry-specificRecognition

This subtopic governs how mining entities account for stripping costs — the costs of removing overburden and waste materials to access ore — incurred during the production phase of a mine. The core rule is that post-production-phase stripping costs are variable production costs that must be capitalized into the cost of the inventory (ore) extracted in the same period the stripping costs are incurred. Stripping costs incurred before the production phase (i.e., during development) are outside the scope of this subtopic.

Key points (5)
  • This Subtopic addresses accounting for stripping costs incurred in the production phase of mining operations (330-930-05-1).
  • Stripping costs incurred during the production phase are variable production costs that should be included in the costs of the inventory produced (extracted) during the period the stripping costs are incurred (330-930-25-1).
  • The guidance does not apply to stripping costs incurred before the production phase (330-930-15-2(a)).
  • Scope otherwise follows the Extractive Activities—Mining Overall Subtopic scope in Section 930-10-15 (330-930-15-1).
  • Because the costs attach to inventory extracted in the same period, they cannot be deferred and amortized over the mine's life or over future periods benefited.

For students. The exam trap is timing: only production-phase stripping costs are inventoriable under this subtopic, and they hit inventory in the period incurred — students often wrongly assume stripping costs can be capitalized as a long-lived asset and amortized over the ore body's life. Identify whether the mine has reached the production phase before applying the rule.

stripping costsproduction phasevariable production costsinventory costingoverburden removalmining operationsdevelopment phase costs

Machine-generated study aid for ASC 330-930. Check the source paragraphs below.

330-930-05Overview and Background

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330-930-05-1
This Subtopic addresses the accounting for stripping costs incurred in the production phase of mining operations.

330-930-15Scope and Scope Exceptions

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Overall Guidance

330-930-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 930-10-15, with specific transaction exceptions noted below.

Transactions

330-930-15-2
The guidance in this Subtopic does not apply to the following transactions:
  1. a
    Stripping costs incurred before the production phase.

330-930-25Recognition

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Production Phase Stripping Costs

330-930-25-1
Stripping costs incurred during the production phase of a mine are variable production costs that should be included in the costs of the inventory produced (that is, extracted) during the period that the stripping costs are incurred.

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