ChevronTexaco, the giant oil company, holds reserves of oil and gas assets. At the end of 20X4, assume the cost of ChevronTexaco's mineral assets totaled $150 billion, representing 12 billion barrels of oil in the ground.
1. Which depreciation method do ChevronTexaco's and other oil companies use to compute their annual depletion expense for the minerals removed from the ground?
2. Suppose ChevronTexaco removed 0.6 billion barrels of oil during 20X5. Record depletion expense for the year. Show amounts in billions.
3. At December 31, 20X4, ChevronTexaco's Accumulated Depletion account stood at $85.0 billion. Report Mineral Assets and Accumulated Depletion at December 31, 20X5. Do ChevronTexaco's Mineral Assets appear to be plentiful or mostly used up? Give your reason.