Bingo Oil Corporation recently acquired a truck costing $60,000 with an estimated life of five years (ignore salvage value). The foreman drives the truck to oversee operations on seven leases, all in the same general geographical area. The foreman keeps a log of his mileage in order to determine how the truck is utilized.

Analysis of the log indicated that 1/3 of the mileage driven was related to travel to drilling operations, 1/3 was related to travel to G&G exploration areas, and 1/3 was related to travel to production locations. Bingo uses the successful efforts method of accounting.

REQUIRED:

a. Give any entries necessary to record depreciation on the truck for the first year that it was in service, assuming the seven leases were located on different reservoirs.

b. Give any entries necessary to record depreciation on the truck for the first year that it was in service, assuming the seven leases were on the same reservoir. The total of net wells and equipment, including the truck above, was $900,000. Proved reserves at the end of the year were 300,000 barrels, proved developed reserves at the end of the year were 120,000 barrels, and production during the year was 30,000 barrels.