Question:
Data as of 12/31/18 for Upbeat Oil Company’s US properties are as follows:
REQUIRED:
a. Use T-accounts to accumulate costs.
b. Calculate DD&A for 2019, assuming no cost exclusions and using a common unit of measure based on BOE.
c. Calculate DD&A for 2019, assuming all possible cost exclusions and using a common unit of measure based on BOE. In addition, assume impairment for unproved properties was $75,000 and the allowance for impairment was $25,000 at 12/31/19.
Transcribed Image Text:
Unproved properties, control... Wells-in-progress unproved properties. Dry exploratory wells on unproved properties Abandoned costs of unproved properties Proved properties..... Wells and equipment. Accumulated DD&A..... Upbeat's activities during 2019 were as follows: Unproved properties acquired.. Delay rentals paid..... Test-well contributions paid on unproved properties Title exams paid on unproved properties.. Title defenses paid on unproved properties.. Unproved properties proved during 2019. Unproved properties abandoned.... Exploratory dry hole drilled on unproved property (Total cost of well was $375,000; $100,000 was in progress at 12/31/18, and therefore not incurred during 2019; $275,000 was incurred in 2019.). Successful exploratory well drilled... $ 200,000 350,000 425,000 275,000 190,000 600,000 375,000 $ 35,000 10,000 20,000 8,000 15,000 30,000 20,000 275,000 400,000 Development dry hole drilled... 300,000 Service well drilled...... 325,000 Tanks, separators, etc., installed.. 125,000 Development well partially drilled, in progress 12/31/19.... 140,000 Estimated future development costs 225,000 Oil (bbl) Gas (Mcf) Production 100,000 500,000 Proved reserves, 12/31/19 Proved developed reserves, 12/31/19 1,020,000 5,000,000 900,000 4,700,000