AFM 291 - E11-12

AFM 291 - E11-12 - NBV = 1155000 97020 = 1058980 b) F Oil...

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E11-12 a) Depletion cost = (500,000 + 625,000 (intangibles) + 30,000 (asset retirement obligation))/ 250,000 = 4.62/barrel Depletion cost for the first year = 4.62/barrel x 21,000 barrels = 97,020 Inventory 97000 Accumulated Depletion 97020 An annual lease would be an operating lease and would not be capitalized
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Unformatted text preview: NBV = 1155000 97020 = 1058980 b) F Oil Property 1155000 Cash 11250000 Liability for site restoration 30000 Inventory 74750 Cash 74750 (needs to be put in inventory until sold) (27500 + 5%*45*21000 barrels)...
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