ASC 805-930

Extractive Activities—Mining

805 Business Combinations

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Source downloaded: 2026-09-10T01:26:26.818Z.Record version 27d619dd4621. Effective date must be checked in the source.

In brief

AdvancedBusiness combinations Fair value Initial measurement Industry-specific

This Subtopic gives industry-specific guidance on how a mining entity measures mineral rights and other mining assets in a business combination purchase price allocation. It requires that value beyond proven and probable reserves (VBPP) be included in the value allocated to mining assets to the extent a market participant would include it, and that anticipated future mineral price fluctuations be reflected consistently with marketplace participant expectations.

Key points (6)

The Subtopic addresses valuation of mineral rights in a business combination (805-930-05-1) and uses the same scope as Section 930-10-15 (805-930-15-1).
Value beyond proven and probable reserves must be included in the value allocated to mining assets in a purchase price allocation to the extent a market participant would include it in determining the asset's fair value (805-930-30-1).
Anticipated fluctuations in future market prices of minerals must be reflected in the fair value of mining assets consistently with marketplace participant expectations (805-930-30-2).
An entity generally should consider all available information — current prices, historical averages, and forward pricing curves — in estimating future mineral prices (805-930-30-2).
Marketplace price assumptions typically should be consistent with the acquiring entity's operating plans for developing and producing the minerals (805-930-30-2).
Using a single factor, such as current price or a historical average, as a surrogate for future prices without considering other market participant information is generally inappropriate (805-930-30-2).

For students. Mining acquisitions often involve large amounts tied to resources that are not yet proven and probable reserves; the common mistake is assuming only proven and probable reserves can be valued, or defaulting to spot price or a historical average instead of the full mix of market participant pricing information.

mineral rights value beyond proven and probable reserves purchase price allocation mining assets market participant assumptions fair value measurement forward pricing curves future mineral prices

Machine-generated study aid for ASC 805-930. Check the source paragraphs below.

805-930-05Overview and Background

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805-930-05-1

This Subtopic addresses valuation of mineral rights in a business combination.

805-930-15Scope and Scope Exceptions

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Overall Guidance

805-930-15-1

This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 930-10-15.

805-930-30Initial Measurement

Source downloaded: 2026-09-10T01:26:26.818Z.Record version 0cb8ad4b4c00. Effective date must be checked in the source.

Value Beyond Proven and Probable Reserves

805-930-30-1

An entity shall include value beyond proven and probable reserves in the value allocated to mining assets in a purchase price allocation to the extent that a market participant would include value beyond proven and probable reserves in determining the fair value of the asset.

Anticipated Future Price Fluctuations

805-930-30-2

An entity shall include the effects of anticipated fluctuations in the future market price of minerals in determining the fair value of mining assets in a purchase price allocation in a manner that is consistent with the expectations of marketplace participants. Generally, an entity should consider all available information including current prices, historical averages, and forward pricing curves. Those marketplace assumptions typically should be consistent with the acquiring entity's operating plans with respect to developing and producing minerals. It generally would be inappropriate for an entity to use a single factor, such as the current price or a historical average, as a surrogate for estimating future prices without considering other information that a market participant would consider.