# ASC 805-930: Business Combinations — Extractive Activities—Mining

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/805/930/)

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## ASC 805-930: Business Combinations — Extractive Activities—Mining

### Machine-generated study aids

```json
{
  "summary": "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": [
    "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)."
  ],
  "categories": [
    "Business combinations",
    "Fair value",
    "Initial measurement",
    "Industry-specific"
  ],
  "audience_level": "advanced",
  "student_note": "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.",
  "related_topics": [
    "805-20",
    "805-30",
    "930-10",
    "820-10",
    "930-360",
    "350-30"
  ],
  "key_concepts": [
    "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"
  ]
}
```

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## ASC 805-930-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/805/930/#05-overview-and-background)

SEC content: no

##### [805-930-05-1](https://asc.understandingaccounting.org/asc/805/930/#805-930-05-1)

Pending content: no

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This Subtopic addresses valuation of [mineral rights](https://asc.understandingaccounting.org/glossary/m/#mineral-rights "The legal right to explore, extract, and retain at least a portion of the benefits from mineral deposits.") in a business combination.

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## ASC 805-930-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/805/930/#15-scope-and-scope-exceptions)

SEC content: no

#### Overall Guidance

##### [805-930-15-1](https://asc.understandingaccounting.org/asc/805/930/#805-930-15-1)

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

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## ASC 805-930-30: 30 Initial Measurement

[Read section](https://asc.understandingaccounting.org/asc/805/930/#30-initial-measurement)

SEC content: no

#### Value Beyond Proven and Probable Reserves

##### [805-930-30-1](https://asc.understandingaccounting.org/asc/805/930/#805-930-30-1)

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An entity shall include [value beyond proven and probable reserves](https://asc.understandingaccounting.org/glossary/v/#value-beyond-proven-and-probable-reserves "Value beyond proven and probable reserves is the economic value that exists in a mining asset beyond the value attributable to proven and probable reserves. The distinction between the categories of reserves relates to the level of geological evidence and, therefore, confidence in the reserve estimates.") in the value allocated to [mining assets](https://asc.understandingaccounting.org/glossary/m/#mining-assets "Mining assets include mineral properties and rights.") in a purchase price allocation to the extent that a market participant would include value beyond [proven](https://asc.understandingaccounting.org/glossary/p/#proven-reserves "Proven reserves are reserves for which both of the following conditions are met: Quantity is computed from dimensions revealed in outcrops, trenches, workings, or drill holes; grade and/or quality are computed from the results of detailed sampling. The sites for inspection, sampling, and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth, and mineral content of reserves are well established.") and [probable reserves](https://asc.understandingaccounting.org/glossary/p/#probable-reserves "Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.") in determining the fair value of the asset.

#### Anticipated Future Price Fluctuations

##### [805-930-30-2](https://asc.understandingaccounting.org/asc/805/930/#805-930-30-2)

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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.