The Method Used to Account for Oil and Gas Exploration

question 32

Multiple Choice

The method used to account for oil and gas exploration costs that capitalizes the exploration costs of productive wells is the: 

• A) reserve recognition accounting.
• B) successful efforts approach.
• C) soft asset approach.
• D) full-cost approach.

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Definitions:

Materials Requisitioned

The process or document used to request and authorize the use or withdrawal of materials from inventory for production or other business needs.

Drop-Forge Strokes

A manufacturing process involving the shaping of metal using a heavy hammer or press that drops on the workpiece.

Direct Labor

The cost of wages and benefits for employees directly involved in the production of goods or services.

Overhead Applied

The portion of overhead costs assigned to the production of goods or services.