Al Kawthar Company has oil and gas properties located only in the United States. Data for Al Kawthar Companyas of December 31, 2020, are as follows:Cost to be amortized37,500,000Production during 2020Oil19,000,000 bbl18,000,000 MctGasProved reserves, 31/12/20OilGas14,000,00032,000,000 McfbblSelling price at 31/12/20Oil120 bbl20 MctGasAverage selling price during 2020Oil110 bbl12 MctGasCompute the DD&A based on unit-of-revenue for 2020. Show ALL workings.

Given: - Particulars Amount ($) Book value 37,500,000 Production during 2020: Oil 19,000,000…

Al Kawthar Company has oil and gas properties located only in the United States. Data for Al Kawthar Company as of December 31, 2020, are as follows: Cost to be amortized 37,500,000 Production during 2020 Oil 19,000,000 bbl Gas 18,000,000 Mat Proved reserves. 31/12/20 Oil Gas 14,000,000 32,000,000 Mcf bbl Selling price at 31/12/20 Oil Gas 120 bbl 20 Mcf 24 Average selling.price during 2020 Oil 110bbl 12 Mcf Gas Compute the DD&A based on unit-of-revenue for 2020. Show ALL workings.

Al Kawthar Company has oil and gas properties located only in the United States. Data for Al Kawthar Company as of December 31, 2020, are as follows: Cost to be amortized 37,500,000 Production during 2020 Oil 19,000,000 bbl Gas 18,000,000 Mat Proved reserves. 31/12/20 Oil Gas 14,000,000 32,000,000 Mcf bbl Selling price at 31/12/20 Oil Gas 120 bbl 20 Mcf 24 Average selling.price during 2020 Oil 110bbl 12 Mcf Gas Compute the DD&A based on unit-of-revenue for 2020. Show ALL workings.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Al Kawthar Company has oil and gas properties located only in the United States. Data for Al Kawthar Company as of December 31, 2020, are as follows: Cost to be amortized 37,500,000 Production during 2020 Oil 19,000,000 bbl Gas 18,000,000 Mcf Proved reserves. 31/12/20 Oil 14,000,000 bbl 32,000,000 Mcf Gas Selling price at 31/12/20 Oil 120 bbl Gas 20 Mcf Average selling.price duting 2020 Oil 110 bbl Gas 12 Mcf Compute the DD&A based on equivalent energy units for 2020. Show ALL workings. %24 %24
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On August 1, Rantoul Stores Inc. is considering leasing a building and purchasing the necessary equipment to operate a retail store. Alternatively, the company could use the funds to invest in $1,000,000 of 4% U.S. Treasury bonds that mature in 15 years. The bonds could be purchased at face value. The following data have been assembled: Cost of store equipment $1,000,000 Life of store equipment 15 years Estimated residual value of store equipment $50,000 Yearly costs to operate the store, excluding depreciation of store equipment $200,000 Yearly expected revenues—years 1–6 $300,000 Yearly expected revenues—years 7–15 $400,000 1. Prepare a differential analysis as of August 1 presenting the proposed operation of the store for the 15 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount is zero, enter "0". Differential AnalysisOperate Retail (Alt. 1) or Invest in Bonds (Alt. 2)August 1…
On August 1, Rantoul Stores Inc. is considering leasing a building and purchasing the necessary equipment to operate a retail store. Alternatively, the company could use the funds to invest in $900,000 of 3% U.S. Treasury bonds that mature in 15 years. The bonds could be purchased at face value. The following data have been assembled: Revenues/costs Amount Cost of store equipment $900,000 Life of store equipment 15 years Estimated residual value of equipment $45,000 Annual store operating costs less depreciation 200,000 Annual expected revenues in years 1-6 250,000 Annual expected revenues in years 7-15 300,000 Prepare a differential analysis as of August 1 presenting the proposed operation of the store for the 15 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). Based on the results disclosed by the differential analysis, should the proposal be accepted? If the proposal…