Arabia Petroleum holds huge reserves of oil and gas assets. Assume that at the end of 2010, Arabia Petroleum’s cost of oil and gas reserves totaled \($84\) billion, representing 7 billion barrels of oil and gas.
Requirements
1. Which depreciation method does Arabia Petroleum use to compute depletion?
2. Suppose Arabia Petroleum removed 0.7 billion barrels of oil during 2011. Journalize depletion expense for 2011.