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(a) Alpha company, a full cost company, has the following information available:

(a)       Alpha company, a full cost company, has the following information available:

Acquisition costs of unproved properties, net of impairment                        $ 150,000

Nondrilling costs of unproved properties - direct                                           200,000

Abandoned property costs                                                                                 50,000

Dry holes on unproved properties                                                                    300,000

Capitalized costs of proved properties                                                           1,200,000

Costs of major development project (not included above)                              400,000

Accumulated DD&A                                                                                       350,000

PV of future gross revenues                                                                           2,050,000

PV of future related costs                                                                               700,000

Lower of cost or market of unproved properties                                             275,000

Apply the full cost ceiling test assuming that all possible costs are excluded from the amortization base (ignore income taxes).

(b)       Compare the full cost ceiling test to the impairment rules for successful efforts companies.

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