Discuss the difference between the successful efforts and full-costing methods of accounting for oil and gas resources. What type of company is most likely to use each method?
With successful efforts accounting, the cost of exploring a dry well is immediately expensed. This is considered a more conservative method and is used by most large oil companies. With the full-costing method, the costs of exploring all wells is recorded as an asset and depleted over the estimated life of the resources. This method tends to improve a company's earnings performance in its early years and is used most by small, independent oil companies.
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PERT is a probabilistic technique, whereas CPM is a deterministic technique
Indicate whether the statement is true or false
Midstates Utility Corporation contracts with North American Energy Company to buy 50,000 gallons of heating oil. North American agrees to deliver the oil in five equal installments between October 1 and the following March 15. The winter is the warmest on record, however, and after the last agreed delivery, Midstates has accepted only 30,000 gallons of the oil. When North American tenders the rest of the oil, Midstates refuses to take it, citing the weather and claiming to be acting in good faith. Will North American succeed in a suit against Midstates for breach of contract?
What will be an ideal response?
The cost of external equity capital raised by issuing new common stock (re) is defined as follows, in words: "The cost of external equity equals the cost of equity capital from retaining earnings (rs), divided by one minus the percentage flotation cost required to sell the new stock, (1 - F)."
Answer the following statement true (T) or false (F)
Bread Corporation is a C corporation with earnings of $100,000. It paid $20,000 in dividends to its sole shareholder, Gerald. Gerald also owns 100% of Butter Corporation, an S corporation. Butter had net taxable income of $80,000 and made a $15,000 distribution to Gerald. What income will Gerald report from Bread and Butter's activities?
A) $35,000 B) $95,000 C) $100,000 D) $180,000