>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

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
2) The capital investment required in a certain project is $ 5000. The project production profile is as follows: year Production 20 25 15 12 10 Calculate the depreciation schedules using the following techniques: Straight-line depreciation. - Sum of the year's digits. - Declining balance -Units of production.
19. Convert 20% compounded semi annually to equivalent nominal rate compounded daily. 7. It is the amount of an asset which cannot be recovered due to certain reasons. It could result in trading an asset ithout knowing the current book value. sunk cost resale value scrap value salvage value
Round to four decimal places.
The duration of the assets to four decimal places:Cash: 0.0000 yearsLoans: 1.7500 yearsTreasuries: 7.0000 years The duration of the liabilities to four decimal places:Time Deposits: 1.7500 yearsCDs: 2.5000 yearsEquity: Not provided If all interest rates decline 90 basis points (ΔR/(1 + R) = -90 basis points), the change in the market value of equity can be calculated as follows:
Clementine County's assets have a market value of $5,000,000 and a duration of 11 at the current market interest rate of 2.5%. Use the duration formula to estimate the value of the assets if the market interest rate changes from 2.5% to 2.2%. O 5.161 million O 5.247 million O 5.032 million 4.917 million
Compute the NPV of the project below assuming that the cost of capital is 8%: Year 0 1 2 3 FCF -85,000 55,000 55,000 68,000
ASAP
Consider an asset with upfront cost of $32,639. The cost associated with it during the first year of operation is $3,415. The cost associated with it during the second year of operation is $12,099. With an interest rate of 0.08, what is a levelized cost payment payable at the end of years 1 and 2, which has the same present value as the actual cost stream at the end of period 0. The annuity formula for an interest rate of 0.08 and t payments is given by 0+ 2)-(¹-0)