24.+4Data for Hill Oil Company are as follows for all US properties:Acquisition costs of unproved property, net of impairment. . $ 300,000Nondrilling evaluation costs of unproved property-direct ..400,000Abandoned costs....100,000Dry holes on unproved property600,000Capitalized costs of proved property..2,400,000Costs of major development project (costs not included above)800,000Accumulated DD&A (assume same for part a and part b)...Deferred income taxes...PV of future gross revenuePV of future related costs...Income tax effects-books versus tax.LCM of unproved properties...700,000500,0004,100,0001,400,000500,000550,000REQUIRED:a. Apply the full cost ceiling test and record any entries necessary, assumingthat all possible costs are excluded from amortization.b. Apply the full cost ceiling test and record any entries necessary, assumingthat all possible costs are being amortized.

Hill Oil Company - Full Cost Ceiling TestData:Acquisition costs of unproved property (net):…

Answered: 24. +4 Data for Hill Oil Company are as…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

3. ABC Company acquired a tract of land containing an extractable natural resource. ABC is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,500,000 tons and that the land will have a value of P1,000,000 after restoration. Relevant cost information follows: Land .- P9,000,000 and Estimated restoration costs - 1,500,000. What should be the depletion charge per ton of extracted material?
(Adapted) 5. Joseph Company acquired a tract of land containing an extractable natural resource. Joseph is required by the purchase contract to restore the land to a condition suitable fo recreational use after it has extracted the natural resource Geological surveys estimate that the recoverable reserves will be 2,500,000 tons and that the land will have a value of P1,000,000 after restoration. Relevant cost information follows: P9,000,000 Land Present value of estimated restoration costs 1,500,000 What should be the depletion charge per ton of extracted material? a. P4.00 (Adapted) •b. P3.80 c. P3.60 d. P3.20
Given the following information and assuming straight-line depreciation to zero, what is the IRR of this project? Initial investment = $400,000; life = four years; cost savings = $125,000 per year; salvage value = $20,000 in year 5; tax rate = 34%; discount rate = 12%.Multiple Choice7.51%9.43%10.24%6.25%8.15%
Please help with answers asap
The components of the cost of a major item of equipment are given below: $ Purchase price 780,000 Import duties 117,000 VAT (refundable) 78,000 Site preparation 30,000 Installation 28,000 Testing 10,000 Initial losses before asset reaches planned performance 50,000 Discounted cost of dismantling and removal at end of useful life 40,000 1,133,000 What amount should be recognised as the cost of the asset in accordance with IAS 16 Property, plant and equipment ?
16. Determine the amount of the total amortization cost base, assuming (1) no exclusions from the amortization base, and (2) all possible costs are excluded from the amortization base. Unproved property-cost $80,000, amount impaired $20,000 (if excluded) Unproved property-abandoned- -cost $30,000, no impairment Unproved property-found proved reserves- cost $18,000, no impairment Unproved property purchased- cost $50,000 Wells-in-progress on unproved property $100,000 Well completed on unproved property dry-hole cost $250,000 Total (1) Amount |(2) Amount― no exclusions all exclusions ?
16. An asset originally cost $100,000, also incurred installation costs of $10,000 and has an estimated salvage value of $25,000. It is being depreciated under MACRS, using a 5-year normal recovery period. What is the depreciation expense in year 1?A. $15,000B. $12,750C. $11,250D. $22,000
Please help with answers asap
The components of the cost of a major item of equipment are given below.GHSPurchase price 780,000Import duties 117,000VAT (refundable) 78,000Site preparation 30,000Installation costs 28,000Pre-production costs 18,000Initial operating losses before the asset reaches planned performance 50,000Estimated cost of dismantling and removal of the asset, recognized as a provision under IAS 37 Provisions,Contingent Liabilities and Contingent Assets 100,0001,201,000In accordance with IAS 16 Property, Plant and Equipment, what amount should be recognized as the cost of the asset?
A9
Bluestone Ltd has provided the following figures for two investment projects, only one of which may be chosen. Project A Project B £ £ Initial outlay 190,000 170,000 Profit for year 1 55,000 15,000 2 40,000 25,000 3 25,000 45,000 4 10,000 65,000 Estimated resale value at end of year 4 50,000 20,000 Profit is calculated after deducting straight line depreciation. The business has a cost of capital of 10%. a) Calculate the payback period, net present value and accounting rate of return for each project, and provide brief recommendations as to what project needs to be chosen based on the following: The Payback Period. The Accounting Rate of Return/Return on Capital Employed. The Net Present Value.
A mining project requires the purchase of new drilling equipment at a cost of $69750. A further $36000 will be spent on transport, installation and initial maintenance of the equipment, at the very beginning of the project. Of this amount, 35% constitutes maintenance costs and will be written off in Year 1, and the remainder will be capitalised. What is the value of the equipment for depreciation purposes? Question 4Answer a. $82350 b. $93150 c. $105750 d. $69750

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS