BB Petroleum, a giant oil company, holds reserves of oil and gas assets. At the end of 2018, assume the cost of BB's oil reserves totaled $234 billion, representing 18 billion barrels of oil in the ground. Read the requirements. 1. Which depreciation method is similar to the depletion method that BB and other oil companies use to compute their annual depletion expense for the oil removed from the ground? Units-of-production is similar to the depletion method that BB Petroleum and other oil companies use to compute their annual depletion expense for the oil removed from the ground. 2. Suppose the company removed 1,200 million barrels of oil during 2019. Record this event. (Record debits first, then credits. Exclude explanations from any journal entries. Enter amounts in billions as provided to you in the problem statement. Round all calculations and the final answer to the nearest tenth of a billion, X.X) Journal Entry Date Oil Inventory Oil Reserve iRequirements Accounts Debit - Billions 6.5 1. Which depreciation method is similar to the depletion method that BB and other oil companies use to compute their annual depletion expense for the oil removed from the ground? 2. Suppose the company removed 1,200 million barrels of oil during 2019. Record this event. Show amounts in billions. 3. Assume that, of the amount removed in (2), the company sold 1000 million barrels. Make the cost of sales entry. x Credit wer. Check 6.5
BB Petroleum, a giant oil company, holds reserves of oil and gas assets. At the end of 2018, assume the cost of BB's oil reserves totaled $234 billion, representing 18 billion barrels of oil in the ground. Read the requirements. 1. Which depreciation method is similar to the depletion method that BB and other oil companies use to compute their annual depletion expense for the oil removed from the ground? Units-of-production is similar to the depletion method that BB Petroleum and other oil companies use to compute their annual depletion expense for the oil removed from the ground. 2. Suppose the company removed 1,200 million barrels of oil during 2019. Record this event. (Record debits first, then credits. Exclude explanations from any journal entries. Enter amounts in billions as provided to you in the problem statement. Round all calculations and the final answer to the nearest tenth of a billion, X.X) Journal Entry Date Oil Inventory Oil Reserve iRequirements Accounts Debit - Billions 6.5 1. Which depreciation method is similar to the depletion method that BB and other oil companies use to compute their annual depletion expense for the oil removed from the ground? 2. Suppose the company removed 1,200 million barrels of oil during 2019. Record this event. Show amounts in billions. 3. Assume that, of the amount removed in (2), the company sold 1000 million barrels. Make the cost of sales entry. x Credit wer. Check 6.5
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:BB Petroleum, a giant oil company, holds reserves of oil and gas assets. At the end of 2018, assume the cost of
BB's oil reserves totaled $234 billion, representing 18 billion barrels of oil in the ground.
Read the requirements.
1. Which depreciation method is similar to the depletion method that BB and other oil companies use to compute
their annual depletion expense for the oil removed from the ground?
Units-of-production is similar to the depletion method that BB Petroleum and other oil companies use to
compute their annual depletion expense for the oil removed from the ground.
2. Suppose the company removed 1,200 million barrels of oil during 2019. Record this event. (Record debits
first, then credits. Exclude explanations from any journal entries. Enter amounts in billions as provided to you in
the problem statement. Round all calculations and the final answer to the nearest tenth of a billion, X.X)
Journal Entry
Date
Oil Inventory
Oil Reserve
i Requirements
Accounts
Debit
1. Which depreciation method is similar to the depletion method that BB and other
oil companies use to compute their annual depletion expense for the oil
removed from the ground?
2. Suppose the company removed 1,200 million barrels of oil during 2019. Record
this event. Show amounts in billions.
Billions
6.5
3. Assume that, of the amount removed in (2), the company sold 1000 million
barrels. Make the cost of sales entry.
X
Credit
wer.
Check
6.5
?
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