E9-17 (Algo) (Supplement 9A) Calculating and Reporting Depletion [LO 9-S1]Olive Companies (OC) paid $5,760,000 for an oil reserve estimated to hold 90,000 barrels of oil. Oil production is expected to be14,000 barrels in year 1, 62,000 barrels in year 2, and 14,000 barrels in year 3. Olive Companies expects to begin selling barrels fromits oil inventory in year 4.Required:1. Assuming these estimates prove to be accurate, show the balances in the oil reserve, accumulated depletion, and oil inventoryaccounts in each of the three years.2. What effect does this yearly depletion have on the income statement?Complete this question by entering your answers in the tabs below.Required 1Required 2Assuming these estimates prove to be accurate, show the balances in the oil reserve, accumulated depletion, and oilinventory accounts in each of the three years.Oil ReserveAccumulated DepletionOil Reserve, NetOil InventoryYear 1Year 2Year 3$ 4,864,000$ 4,864,000$ 4,864,000 ×896,0004,864,000 ×3,968,000896,0003,968,000 ☑896,0004,864,000< Required 104,864,000 ×Required 2>

The oil reserve is the cost paid which is $5,760,000.To continue on, first we compute the estimated…

Answered: E9-17 (Algo) (Supplement 9A)…

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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[The following information applies to the questions displayed below.] On January 1, the Matthews Band pays $68,200 for sound equipment. The band estimates it will use this equipment for five years and perform 200 concerts. It estimates that after five years it can sell the equipment for $2,000. During the first year, the band performs 55 concerts. QS 8-5 (Algo) Units-of-production depreciation LO P1 Compute the first-year depreciation using the units-of-production method. Select formula for the depreciation rate of Units of Production: Calculate the first year depreciation expense: Depreciation per concert Concerts in first year Depreciation in first year
A refinery buys 20 million barrels of crude oil at a market price of $25 per barrel on 17th August 20X1. Having processed the oil, the refinery sells its final products in October 20X1 for an average price of $43 per barrel, when the average market price of crude oil is $30 per barrel. Which of the following statements about current replacement cost accounting is/are correct: (i) Cost of sales is $500 million. (ii) The capital maintenance adjustment is $130 million. (iii) Replacement cost profit of $360 million is made on the sale. Select one: a. (i) only b. (ii) only c. No statement is correct d. (i) and (iii) e. (i) and (ii) ○ f. (iii) only g. (ii) and (iii)
Louisiana Oil Company (LOC) paid $3,000,000 for an oil reserve estimated to hold 50,000 barrels of oil. Oil production is expected to be 10,000 barrels in year 1, 30,000 barrels in year 2, and 10,000 barrels in year 3. LOC expects to begin selling barrels from its oil inventory in year 2. Required: Assuming these estimates are accurate, determine the book value of oil reserves at the end of year 1.
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A refinery buys 20 million barrels of crude oil at a market price of $25 per barrel on 17th August 20X1. Having processed the oil, the refinery sells its final products in October 20X1 for an average price of $43 per barrel, when the average market price of crude oil is $30 per barrel. Which of the following statements about current replacement cost accounting is/are correct: (i) Cost of sales is $500 million. (ii) The capital maintenance adjustment is $130 million. (iii) Replacement cost profit of $360 million is made on the sale. Select one: a. (i) only b. (ii) only c. No statement is correct d. (i) and (iii) e. (i) and (ii) ○ f. (iii) only g. (ii) and (iii)
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Required Information Problem 6-10 (Algo) Long-term contract; revenue recognition over time [LO6-8, 6-9] [The following Information applies to the questions displayed below.] In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: 2025 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2024 2026 $ 2,490,000 5,810,000 2,030,000 $ 3,984,000 $ 2,008,600 1,826,000 в 4,444,000 3,900,000 3,526,000 4,285,000 1,815,000 Westgate recognizes revenue over time according to percentage of completion. Problem 6-10 (Algo) Part 4 4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years, assuming the following costs Incurred and costs to complete Information. Note: Do not round Intermediate calculations and round your final…
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