Fixed assets and exploration in Ecuadorian mining companies

Abstract

The mining sector, from an accounting point of view, must apply the International Fi-nancial Reporting Standards (IFRS) specifically IAS 16 Property, plant and equipment and IFRS 6 Exploration and evaluation of mineral resources. The first standard deals with the recording of the assets of the company that it uses in its main activity, while the second seeks to specify the assets for exploration and evaluation, while incorporat-ing the impairment account. This paper seeks to describe the use of IAS 16 and IFRS 6 by extraction companies in Ecuador, to evaluate and compare the profitability of com-panies that have incorporated the asset accounts for exploration and evaluation with those that have not. have made. The base of the Superintendecia de Compañías, Se-guro y Valores of Ecuador had 1,918 observations of extractive companies, micro-companies were eliminated and those that meet the characteristic of being extraction companies were selected and have information in the financial statements since 2014 until 2018. A balanced panel was prepared for the years 2014 to 2018 with 525 obser-vations from 105 companies. Descriptive statistics are used as a methodology to make a description of the mining companies, while inferential statistics are used to assess profitability, specifically the non-parametric Kruskal Wallis H test. The results show that the majority of companies have used the exploration intangible assets account, but there is no relationship between it and their valuation account. On the other hand, there is no difference in terms of profitability, between companies that use IFRS 6 and those that do not.