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During the current year, Puff Company incurred P5,000,000 in exploration cost for each of 20 oil wells drilled in the current year, in West Mindanao. Of the 20 well drilled, 14 were dry holes. The entity used the successful effort method of accounting. None of the oil found is depleted in the current year.
- What oil exploration expense should be reported in the current year?
A. 50,000,000
B. 30,000,000
C. 70,000,000
D. 0
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- Accounting for natural resources Conseco Oil, Inc. has an account titled Oil and Gas Properties. Conseco paid $6,600,000 for oil reserves holding an estimated 1,000,000 barrels of oil. Assume the company paid $570,000 for additional geological tests of the property and $450,000 to prepare for drilling. During the first year, Conseco removed and sold 72,000 barrels of oil. Record all of Conseco’s transactions, including depletion for the first year.Quavo Mining Co. acquired mineral rights for $17,857,500. The mineral deposit is estimated at 48,500,000 tons. During the current year, 10,912,500 tons were mined and sold. Determine the amount of depletion expense for the current year. Round your answer to nearest whole value.Accounting for natural resources Donahue Oil Incorporated has an account titled Oil and Gas Properties. Donahue paid $6,400,000 for oil reserves holding an estimated 400,000 barrels of oil. Assume the company paid $510,000 for additional geological tests of the property and $470.000 to prepare for drilling. During the first year, Donahue removed and sold 75.000 barrels of oil. Record all of Donahue’s transactions, including depletion for the first year.