>Unit-of-production methodThis method amortizes the costs of oil and gas industry activities andis dependent on the accounting method chosen by the owner of theassets. The following general formula shows the concept of unit-of-production amortization:[unamortized costs at end of period]+|production for period[Amortization for period]=!reserves at the beginning of period Economic evaluation>Example [Reference 1] Unit-of-production amortizationAssuming total capitalized costs at the end of the period are equal to$1 500 000, accumulated amortization taken in prior periods is equalto $500 000, estimated remaining recoverable reserves at the end ofthe period are equal to 440 000 BOE, and production during the periodis equal to 60 000 BOE, calculate the amortization for the period usingthe unit-of-production method.

Under Unit of production method, amortization cost is based on the production capacity of the asset…

>Example [Reference 1] Unit-of-production amortization Assuming total capitalized costs at the end of the period are equal to $1 500 000, accumulated amortization taken in prior periods is equal to $500 000, estimated remaining recoverable reserves at the end of the period are equal to 440 000 BOE, and production during the period is equal to 60 000 BOE, calculate the amortization for the period using the unit-of-production method.

>Example [Reference 1] Unit-of-production amortization Assuming total capitalized costs at the end of the period are equal to $1 500 000, accumulated amortization taken in prior periods is equal to $500 000, estimated remaining recoverable reserves at the end of the period are equal to 440 000 BOE, and production during the period is equal to 60 000 BOE, calculate the amortization for the period using the unit-of-production method.

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

What is the termination cash flow (everything except the operational cash flow) at the end of year 5?
Cash Flow Asset End of year Amount Appropirate Requried Retrun A 1 $5,000 18% 2 $5,000 3 $5,000 Using cell references to the given datea and the PV function, calculate the value of asset A.
What's the forecasted capital expenditure based on the information below? -Net PP&E beginning of period = 4200-Net PP&E end of period = 6800-Depreciation expenses = 900 a. 5900b. 1700c. 3500d. 2600
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $369,600 with a 8-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment follows. Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (30%) Net income If at least an 10% return on this investment must be earned, compute the net present value of this investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Chart Values are Based on: Select Chart n= j= Amount 8 10 % X PV Factor =
If the value of liabilities is 30000 OMR and Assets are 100000 OMR. Which of the following is the amount of Owner Capital? Select one: O a. 100000 OMR b. 90000 OMR c. 10000 OMR O d. 70000 OMR
Subject: acounting
A 60.
QUESTION 3. Evaluate the following investment project according to the Net Present Value and the Discounted Payback Criteria, and propose its acceptance or rejection. The cost of the capital of the project is 18%. Year Cash Outflows 300.000,00 400.000,00 1 Year Cash Inflows 300.000,00 300.000,00 300.000,00 200.000,00 3 4 Net Scrap Value 30.000,00
A project has an initial capital outlay of Kshs.150,000 and unequal net cash-flows of Kshs 100,0000 in year one, Kshs 80,000 in year two, Kshs 70,000 in year three, Kshs 60,000 in year four, Kshs 50,000 in year five and a Kshs. 30,000 residual values at the end of its life in year six. REQUIRED i. Calculate the Accounting Rate of Return ii. Calculate the Internal Rate of Return iii. From your studies, what is the importance of Internal Rate of Return?
If the net working capital required is 85.1 and the difference between current assets and current liabilities is 70, then what is the contingency rate? Select one: a. 0.177 b. 0.216 c. All the given choices are not correct d. 0.30 e. 1.216
Cash Flow Asset End of year Amount Appropriate Required Return D 1 through 5 $1,500 12% 6 $8,500 By using cell references to the given datea and the function PV, Calculate the value of asset D.
If the annual deposit into depletion reserve is $ 1000 and annual interest on capital investment is $ 125, then find annual net income- -- Select one: O a. $ 1125 b. $ 875 c. $ 1025 d. $ 975