When is a ceiling test write-down required?

	a.	none of these
	b.	when the total net capitalized costs exceeds the present value of future net revenues from proved reserves
	c.	when the ceiling exceeds the total net capitalized costs
	d.	quarterly
	e.	when the total net capitalized costs exceed the ceiling

Assume Big Popi Oil uses the FC method and performs the ceiling test at the end of second quarter using a price of $40/bbl. As a result of the test, BP books a ceiling test write-down of $20 million. By the end of the year, the price has increased to $80/bbl. Using the year-end pricing, no write-down would be required. What action should BP take to "correct" the previously recorded write-down?

	a.	the previous write-down can be reversed if doing so does not significantly impact the company's DD&A rate.
	b.	adjust the accumulated DD&A account and restore the $20 million write-down.
	c.	nothing can be done
	d.	they should reverse the $20 million write-down.
	e.	none of these apply

The ______ method indicates whether the future net cash flow stream generated by an investment will yield a positive net present value when the cash flows are discounted using the company's desired rate of return.

	a.	None of these
	b.	IRR
	c.	NPV
	d.	Profitability index
	e.	Payback