Question 1 Discuss why successful-efforts method of accounting for oil and gas operations is considered to follow generally accepted accounting principles.
Question 1 Discuss why successful-efforts method of accounting for oil and gas operations is considered to follow generally accepted accounting principles.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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AF 317: ACCOUNTING FOR OIL AND GAS
ASSIGNMENTS
A. Individual assignment
Question 1
Discuss why successful-efforts method of accounting for oil and gas operations is considered
to follow generally accepted accounting principles.
Question 2
Both oil and gas are produced from BlowOut Oil Company's lease in Tanzania. Additional
information, 1/1/2017:
TZS 900,000,000
Unrecovered IDC (unamortized IDC)
Proved property costs, net.
L&W equipment, gross .
Beginning of year accumulated DD&A equipment ...
100,000,000
300,000,000
50,000,000
Estimated proved reserves, 12/31/2017
Oil
Gas .
Production during 2017
Oil
200,000 bbl
1,000,000 Mcf
10,000 bbl
Gas
300,000 Mcf
*Intangible Drilling and Development Costs (IDC)
*Lease and Well (L&W)
Assuming the lease is fully developed, compute amortization:
a) assuming oil is the dominant mineral
b) using a common unit of measure based on BOE
B. Group assignment
Question 3
Describe the two methods currently used by oil and gas companies to account for future dismantlement,
restoration and abandonment costs. Discuss the financial statement consequences of the use of each
method.
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Transcribed Image Text:3:ו Bו Adl .1S
3G
品 回 X
88
Edit
19
AF 317: ACCOUNTING FOR OIL AND GAS
ASSIGNMENTS
A. Individual assignment
Question 1
Discuss why successful-efforts method of accounting for oil and gas operations is considered
to follow generally accepted accounting principles.
Question 2
Both oil and gas are produced from BlowOut Oil Company's lease in Tanzania. Additional
information, 1/1/2017:
TZS 900,000,000
Unrecovered IDC (unamortized IDC)
Proved property costs, net.
L&W equipment, gross .
Beginning of year accumulated DD&A equipment ...
100,000,000
300,000,000
50,000,000
Estimated proved reserves, 12/31/2017
Oil
Gas .
Production during 2017
Oil
200,000 bbl
1,000,000 Mcf
10,000 bbl
Gas
300,000 Mcf
*Intangible Drilling and Development Costs (IDC)
*Lease and Well (L&W)
Assuming the lease is fully developed, compute amortization:
a) assuming oil is the dominant mineral
b) using a common unit of measure based on BOE
B. Group assignment
Question 3
Describe the two methods currently used by oil and gas companies to account for future dismantlement,
restoration and abandonment costs. Discuss the financial statement consequences of the use of each
method.
DO
Dם
w
Tools
Mobile View
Share
PDF to DOC
Edit on PC
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