P2 discussion on past exam 1

Hi all, this is Sambath, ACCA student from Phnom Penh, Cambodia.
I’m currently prepare myself for the next P2 exam in Sep, so I take a look at past exam Dec 15 and have a question on a 3 (C) section as follow:

Question:

(iii) From October 2014, Gasnature had undertaken exploratory drilling to find gas and up to 31 August 2015
costs of $5 million had been incurred. At 31 August 2015, the results to date indicated that it was probable
that there were sufficient economic benefits to carry on drilling and there were no indicators of impairment.
During September 2015, additional drilling costs of $2 million were incurred and there was significant
evidence that no commercial deposits existed and the drilling was abandoned.

Answer:
Since there were no indicators of impairment at the period end, all costs incurred up to 31 August 2015 amounting to
$5 million should remain capitalised by the entity in the financial statements for the year ended on that date. However,
if material, disclosure should be provided in the financial statements of the additional activity during the subsequent
period which determined the exploratory drilling was unsuccessful. This represents a non-adjusting event as defined by
IAS 10 Events after the Reporting Period as an event which is indicative of a condition which arose after the end of the
reporting period. The asset of $5 million and additional drilling costs of $2 million incurred subsequently would be
expensed in the following year’s financial statements.
__________________________________________

My question is why ”all the cost incurred up 31 Aug 15 should be capitalized ”?
what I think, the cost incurred prior 31 Aug 15 should be treated as ”research cost” which is an expense as it incurred, and only cost incurred from 31 Aug 15 up that should be capitalized.
Please correct me if I am wrong, or I might misunderstand something on IAS38.

Regards,
Sambath