The cost of the natural resource under the full cost method. Given information: Payment for the acquire land is $500,000. Cost of development is $325,000. Cost incurred in exploration is $130,000. Cost of producing well is $200,000. Estimated assets obligation is $100,000.

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Answer 1

Question

Chapter 11, Problem 11.41E

a.

To determine

The cost of the natural resource under the full cost method.

Given information:

Payment for the acquire land is $500,000.

Cost of development is $325,000.

Cost incurred in exploration is $130,000.

Cost of producing well is $200,000.

Estimated assets obligation is $100,000.

b.

To determine

To prepare: The journal entries to record the acquisition of the natural resources.

c.

To determine

The amount of the depletion under the units of output method.

Given information:

Cost of resource is $1,125,000.

An estimated total unit of resources is $1,000,000 barrels.

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QUESTION 1 Repsola is a drilling company that operates an offshore Oilfield in Feeland. Five years ago, Feeland had a major oil discovery and granted licenses to drill oil to reputable, experienced drilling companies. The licensing agreement requires the company to remove the oil rig at the end of production and restore the seabed. Ninety percent of the eventual costs of undertaking the work relate to the removal of the oil rig and restoration of damage caused by building it and ten percent arise through the extraction of the oil. At the Statement of Financial Position (SOFP) date (December 31 2025), the rig has been constructed but no oil has been extracted On January 1st 2023, Repsola obtained the license to construct an oil rig at a cost of $500 million. Two years later the oil rig was completed. The rig is expected to be removed in 20 years from the date of acquisition. The estimated eventual cost is 100 million. The company's cost of capital is 10% and its year end is December…

Answer 2

Question

Chapter 11, Problem 11.41E

a.

To determine

The cost of the natural resource under the full cost method.

Given information:

Payment for the acquire land is $500,000.

Cost of development is $325,000.

Cost incurred in exploration is $130,000.

Cost of producing well is $200,000.

Estimated assets obligation is $100,000.

b.

To determine

To prepare: The journal entries to record the acquisition of the natural resources.

c.

To determine

The amount of the depletion under the units of output method.

Given information:

Cost of resource is $1,125,000.

An estimated total unit of resources is $1,000,000 barrels.

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Answer 3

Question

Chapter 11, Problem 11.41E

a.

To determine

The cost of the natural resource under the full cost method.

Given information:

Payment for the acquire land is $500,000.

Cost of development is $325,000.

Cost incurred in exploration is $130,000.

Cost of producing well is $200,000.

Estimated assets obligation is $100,000.

b.

To determine

To prepare: The journal entries to record the acquisition of the natural resources.

c.

To determine

The amount of the depletion under the units of output method.

Given information:

Cost of resource is $1,125,000.

An estimated total unit of resources is $1,000,000 barrels.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 11, Problem 11.41E

a.

To determine

The cost of the natural resource under the full cost method.

Given information:

Payment for the acquire land is $500,000.

Cost of development is $325,000.

Cost incurred in exploration is $130,000.

Cost of producing well is $200,000.

Estimated assets obligation is $100,000.

b.

To determine

To prepare: The journal entries to record the acquisition of the natural resources.

c.

To determine

The amount of the depletion under the units of output method.

Given information:

Cost of resource is $1,125,000.

An estimated total unit of resources is $1,000,000 barrels.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 11.41E

a.

To determine

The cost of the natural resource under the full cost method.

Given information:

Payment for the acquire land is $500,000.

Cost of development is $325,000.

Cost incurred in exploration is $130,000.

Cost of producing well is $200,000.

Estimated assets obligation is $100,000.

b.

To determine

To prepare: The journal entries to record the acquisition of the natural resources.

c.

To determine

The amount of the depletion under the units of output method.

Given information:

Cost of resource is $1,125,000.

An estimated total unit of resources is $1,000,000 barrels.

Answer 6

Chapter 11, Problem 11.41E

a.

To determine

The cost of the natural resource under the full cost method.

Given information:

Payment for the acquire land is $500,000.

Cost of development is $325,000.

Cost incurred in exploration is $130,000.

Cost of producing well is $200,000.

Estimated assets obligation is $100,000.

Answer 7

Chapter 11, Problem 11.41E

a.

To determine

The cost of the natural resource under the full cost method.

Given information:

Payment for the acquire land is $500,000.

Cost of development is $325,000.

Cost incurred in exploration is $130,000.

Cost of producing well is $200,000.

Estimated assets obligation is $100,000.

Answer 8

b.

To determine

To prepare: The journal entries to record the acquisition of the natural resources.

Answer 9

b.

To determine

To prepare: The journal entries to record the acquisition of the natural resources.

Answer 10

c.

To determine

The amount of the depletion under the units of output method.

Given information:

Cost of resource is $1,125,000.

An estimated total unit of resources is $1,000,000 barrels.

Answer 11

c.

To determine

The amount of the depletion under the units of output method.

Given information:

Cost of resource is $1,125,000.

An estimated total unit of resources is $1,000,000 barrels.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 11 - Stephen J. Cosgrove is the Former Vice President....Ch. 11 - Prob. 11.2Q Ch. 11 - Prob. 11.3Q Ch. 11 - Prob. 11.4Q Ch. 11 - Will the expense/capitalization choice impact...Ch. 11 - Prob. 11.6Q Ch. 11 - Prob. 11.7Q Ch. 11 - For a long-lived operating asset acquired by...Ch. 11 - Prob. 11.9Q Ch. 11 - Prob. 11.10Q

The cost of the natural resource under the full cost method. Given information: Payment for the acquire land is $500,000. Cost of development is $325,000. Cost incurred in exploration is $130,000. Cost of producing well is $200,000. Estimated assets obligation is $100,000.

Solution Summary: The author explains how the successful efforts method calculates the cost of the development, exploration, and acquisition of natural resources.

Concept explainers

Videos

The cost of the natural resource under the full cost method.

Given information:

Payment for the acquire land is $500,000.

Cost of development is $325,000.

Cost incurred in exploration is $130,000.

Cost of producing well is $200,000.

Estimated assets obligation is $100,000.

To prepare: The journal entries to record the acquisition of the natural resources.

The amount of the depletion under the units of output method.

Given information:

Cost of resource is $1,125,000.

An estimated total unit of resources is $1,000,000 barrels.

Want to see the full answer?

Chapter 11 Solutions

The cost of the natural resource under the full cost method. Given information: Payment for the acquire land is $500,000. Cost of development is $325,000. Cost incurred in exploration is $130,000. Cost of producing well is $200,000. Estimated assets obligation is $100,000.

Solution Summary: The author explains how the successful efforts method calculates the cost of the development, exploration, and acquisition of natural resources.

Concept explainers

Videos

The cost of the natural resource under the full cost method. Given information: Payment for the acquire land is $500,000. Cost of development is $325,000. Cost incurred in exploration is $130,000. Cost of producing well is $200,000. Estimated assets obligation is $100,000.

To prepare: The journal entries to record the acquisition of the natural resources.

The amount of the depletion under the units of output method. Given information: Cost of resource is $1,125,000. An estimated total unit of resources is $1,000,000 barrels.

Want to see the full answer?

Chapter 11 Solutions

The cost of the natural resource under the full cost method.

Given information:

Payment for the acquire land is $500,000.

Cost of development is $325,000.

Cost incurred in exploration is $130,000.

Cost of producing well is $200,000.

Estimated assets obligation is $100,000.

The amount of the depletion under the units of output method.

Given information:

Cost of resource is $1,125,000.

An estimated total unit of resources is $1,000,000 barrels.