Data for Angleford Oil Company’s US properties:

For the column headed I above, assume all possible costs are included in the amortization base. For the column headed E, assume all possible costs are excluded from the amortization base. Place an I in the columns above if a cost must be included in amortization. Place an E in the columns above if the cost may be excluded from amortization.

REQUIRED: Calculate DD&A assuming the following:

a. Inclusion of both unproved property costs and the major development project.

b. Exclusion of both unproved property costs and the major development project.

c. Inclusion of unproved property costs and exclusion of the major development project.

d. Exclusion of unproved property costs and inclusion of the major development project.

e. How would impairment for unproved properties have been handled?

Transcribed Image Text:

I E Acquisition costs of unproved properties, net of impairment $100,000 Acquisition costs, proved properties.... 150,000 Delay rentals, unproved properties-cumulative 30,000 Delay rentals, proved properties cumulative. 50,000 Dry holes, proved properties.. 300,000 Dry holes, unproved properties.. 160,000 Abandoned costs 40,000 Successful well costs.. 400,000 Wells-in-progress unproved properties 175,000 Wells-in-progress-proved properties 125,000 Major development project necessary to determine quantity of proved reserves.... 500,000 Future development costs (proved properties) 300,000 Accumulated DD&A.... (800,000) Production, barrels... 50,000 Proved reserves, beginning of year, barrels 600,000