Calculate the expected net income for P.V Ltd. for years 1 and 2 in Example 2.2. Explain why expected net income is also called "accretion of discount."

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TABLE 2.2 CHIEFTAIN INTERNATIONAL, INC. HANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET TASH FLOWS (thousands of dollars) 2000 1999 1998 Standardized measure, beginning of year $225 $153 $200 Changes result from: Sales, net of production costs (103) (61) (45) Net change in prices and production costs 710 83 (80) Extensions and discoveries, net of costs Change in estimated future development costs 224 83 30 (39) (23) (16) Development costs incurred during the year 28 10 23 Revisions to quantity estimates 88 (8) (17) Accretion of discount 22 15 Purchase of reserves in place 11 - 20 3 Changes in timing and other 14 15 (4) Net change in income taxes Standardized measure, end of year (331) (42) 39 $849 $225 $153 |