(Based on Appendix 10) Explain the difference between the successful efforts and the full-cost methods ofaccounting for oil and gas exploration costs.
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(Based on Appendix 10) Explain the difference between the successful efforts and the full-cost methods of
accounting for oil and gas exploration costs.
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Solved in 2 steps
- Explain the difference between the successful efforts and the full-cost methods of accounting for oil and gas exploration costs.Two alternative methods of acconting for the cost of oil and gas properties have been widely used. The method that capitalizes all cost associated with all wells is the a. Successful-efforts method b. Full-cost method c. Variable-cost method d. Specific-cost methodAssume that the capital expenditures to replace and upgrade the production equipment areas given in the original exercise, but that the production and sales quantity is not known. Forwhat production and sales quantity would SS (i) upgrade the equipment or (ii) replace the equipment?
- Which of the following applies conservatism to the financial statements of a full cost company? Group of answer choices A. Use of the entire country as the cost center B. Full cost ceiling test C. Capitalization of exploratory dry holes D. Exclusion of costs from the amortization pool________ of a project are those that will occur whether a company accepts or rejects a project. a. Opportunity costs b. Erosion costs c. Sunk costs d. Working capital costsWhich one of the following is the proper dollar value of existing equipment to use in replacement analysis? A. Original cost B. Present market value if sold C. Present trade-in value D. Present book value E. Present market value if sold minus removal and selling expenses
- Which of the following would be considered a sunk cost? a. purchase price of new equipment b. warehouse lease expense c. equipment rental for the production area d. net book value of equipment that has no market valueWhich of the following is not a variable when setting the project bid price. Multiple Choice Risk factor analysis. After-tax operating income. Salvage value. Capital spending. Additions to NWC.In computing DD&A for a full cost company: Group of answer choices A. Leasehold cost is amortized over proved reserves and IDC and lease and well equipment are amortized over proved reserves. B. Leasehold cost is amortized over proved reserves and IDC and lease and well equipment are amortized over proved developed reserves. C. Leasehold cost is amortized over proved developed reserves and IDC and lease and well equipment are amortized over proved reserves. D. Leasehold cost is amortized over proved developed reserves and IDC and lease and well equipment are amortized over proved developed reserves.
- provide explanation for capitalising the expenses at evaluation and exploration stage also restoration of a oil extraction project.Why is the original cost estimate corrected based on buyout data? What three types of project costs present the greatest risk to the project manager? What are project labor curves used for?29. Of the following costs related to the development of natural resources, which one is not a part of depletion cost? A) Intangible development costs such as drilling costs, tunnels, and shafts B) Tangible equipment costs associated with machinery used to extract the natural resource C) Acquisition cost of the natural resource deposit D) Exploration costs
