Question: Kent Oil a small Texas oil company holds huge reserves
Kent Oil, a small Texas oil company, holds huge reserves of oil and gas assets. Assume that at the end of 2014, Kent Oil’s cost of mineral assets totaled approximately $ 18 million, representing 2.4 million barrels of oil and gas reserves in the ground. Calculate Kent Oil’s depletion expense per barrel of oil. Suppose Kent Oil removed 0.8 million barrels of oil during 2015 and sold all of these barrels during the year. Record Kent Oil’s depletion expense for 2015.
Relevant QuestionsFor each of the following long-term assets, identify the type of expense that will be incurred to allocate the asset’s cost as depreciation expense (DR), depletion expense (DL), amortization expense (A), or none of these ...At the beginning of the year, Orbit Airways purchased a used Boeing aircraft at a cost of $45 million. Orbit Airways expects the plane to remain useful for five years (3 million kilometers) and to have a residual value of $5 ...At the end of 2014, Zeman, Corp. had total assets of $ 25 million and total liabilities of $ 13 million. Included in the assets were property, plant, and equipment with a cost of $ 9 million and accumulated depreciation of $ ...LHD Freight purchased a building for $ 700,000 and depreciated it on a straight-line basis over a 40-year period. The estimated residual value was $ 100,000. After using the building for 15 years, LHD realized that wear and ...Wilson Mining (WM) purchased a truck on April 1 for $98,500. WM expected the truck will be used for 5 years and to have a residual value of $3,500. WM expects the truck to be used for 125,000 kilometers: first year, 23,000 ...
Post your question