The 2014 Annual Report of Fracking,Inc

question 51

Essay

The 2014 annual report of Fracking,Inc.,provides the following disclosures regarding its oil and gas operations:

During 2014,the company reported exploration expenses totaling $306 million,and depreciation,depletion,and amortization totaling $1,198 million.The amount of capitalized costs for the fiscal years ending December 31,2014,and 2013,were:
Capitalized costs for fiscal years ending December 31,2014,and 2013 (in millions dollars):

Fracking uses the successful-efforts method to account for exploration costs.
Required:
1.What amount of the exploration cost incurred by Fracking in 2014 were capitalized?
2.If Fracking were using the full-cost method of accounting for exploration cost,what amount of exploration cost would be capitalized in 2014.State any assumptions made in order to answer this question.
3.Use the information above to determine the amount of capitalized costs removed (retired or otherwise disposed of)from the capitalized cost account,and the amount of accumulated depreciation,depletion,and amortization related to this item.

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Definitions:

Contemporary Conflict

Modern or currently ongoing disputes or wars between states, groups, or ideologies, often involving issues such as territory, religion, and resources.

Portrait Subject

The person or figure that is being depicted in a portrait.

Pieter Aertsen

A Dutch painter of the 16th century, known for his genre scenes and still lifes, as well as for incorporating biblical subjects into market and kitchen scenes.

New Testament Scene

Imagery or artistic representation derived from events, stories, or characters found in the New Testament of the Christian Bible.