FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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24.
+4
Data for Hill Oil Company are as follows for all US properties:
Acquisition costs of unproved property, net of impairment. . $ 300,000
Nondrilling evaluation costs of unproved property-direct ..
400,000
Abandoned costs....
100,000
Dry holes on unproved property
600,000
Capitalized costs of proved property..
2,400,000
Costs of major development project (costs not included above)
800,000
Accumulated DD&A (assume same for part a and part b)...
Deferred income taxes...
PV of future gross revenue
PV of future related costs...
Income tax effects-books versus tax.
LCM of unproved properties...
700,000
500,000
4,100,000
1,400,000
500,000
550,000
REQUIRED:
a. Apply the full cost ceiling test and record any entries necessary, assuming
that all possible costs are excluded from amortization.
b. Apply the full cost ceiling test and record any entries necessary, assuming
that all possible costs are being amortized.
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Transcribed Image Text:24. +4 Data for Hill Oil Company are as follows for all US properties: Acquisition costs of unproved property, net of impairment. . $ 300,000 Nondrilling evaluation costs of unproved property-direct .. 400,000 Abandoned costs.... 100,000 Dry holes on unproved property 600,000 Capitalized costs of proved property.. 2,400,000 Costs of major development project (costs not included above) 800,000 Accumulated DD&A (assume same for part a and part b)... Deferred income taxes... PV of future gross revenue PV of future related costs... Income tax effects-books versus tax. LCM of unproved properties... 700,000 500,000 4,100,000 1,400,000 500,000 550,000 REQUIRED: a. Apply the full cost ceiling test and record any entries necessary, assuming that all possible costs are excluded from amortization. b. Apply the full cost ceiling test and record any entries necessary, assuming that all possible costs are being amortized.
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