Olive Companies (OC) paid $5,760,000 for an oil reserve estimated to hold 90,000 barrels of oil....

 

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Olive Companies (OC) paid $5,760,000 for an oil reserve estimated to hold 90,000 barrels of oil. Oil production is expected to be 14,000 barrels in year 1, 62,000 barrels in year 2, and 14,000 barrels in year 3. Olive Companies expects to begin selling barrels from its oil inventory in year 4. Required: 1. Assuming these estimates prove to be accurate, show the balances in the oil reserve, accumulated depletion, and oil inventory accounts in each of the three years. 2. What effect does this yearly depletion have on the income statement? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assuming these estimates prove to be accurate, show the balances in the oil reserve, accumulated depletion, and oil inventory accounts in each of the three years. Year 1 Year 2 Year 3 Oil Reserve Accumulated Depletion Oil Reserve, Net Oil Inventory $ 4,864,000 $4,864,000 $4,864,000 3,968,000 4,864,000 896,000 3,968,000 896,000 0 896,000 4,864,000 4,864,000 Olive Companies (OC) paid $5,760,000 for an oil reserve estimated to hold 90,000 barrels of oil. Oil production is expected to be 14,000 barrels in year 1, 62,000 barrels in year 2, and 14,000 barrels in year 3. Olive Companies expects to begin selling barrels from its oil inventory in year 4. Required: 1. Assuming these estimates prove to be accurate, show the balances in the oil reserve, accumulated depletion, and oil inventory accounts in each of the three years. 2. What effect does this yearly depletion have on the income statement? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assuming these estimates prove to be accurate, show the balances in the oil reserve, accumulated depletion, and oil inventory accounts in each of the three years. Year 1 Year 2 Year 3 Oil Reserve Accumulated Depletion Oil Reserve, Net Oil Inventory $ 4,864,000 $4,864,000 $4,864,000 3,968,000 4,864,000 896,000 3,968,000 896,000 0 896,000 4,864,000 4,864,000

Answer rating: 100% (QA)

Olive Companies Oil Reserves Depletion Required 1 Account Balances Account Year 1 Year 2 Year 3 Oil ... View the full answer