MMD Oil Co., which uses successful efforts accounting, produces both oil and gas
ID: 2367555 • Letter: M
Question
MMD Oil Co., which uses successful efforts accounting, produces both oil and gas from its leases in Texas. Additional information as of January 1, 2013: Unrecovered IDC (unamortized IDC)..............600,000 Proved Property Costs, net...............................70,000 L&W; equipment, gross......................................200,000 Beginning of year accumulated DD&A; equipment....30,000 Estimated proved reserves, 12/31/13 Oil............100,000 bbl Gas..........600,000 Mcf Production during 2013 Oil.............5,000 bbl Gas........300,000 Mcf Assuming the lease is fully developed, compute amortization using a common unit of measure based on BOE.Explanation / Answer
Unrecovered IDC (unamortized IDC)..............600,000
Property Costs, net...............................70,000
Net property 70,000
L&W equipment, gross......................................200,000
Less:year accumulated DD&A equipment....30,000
Net 170,000
Oil Gas
Production 1,00,000 5,000
Proved results 6,00,000 3,00,000
production proved Reserves
oil 5000bbl 5000 bbl oil 100000 bbl 100000bbl
Gas 300000mcf/6 50000 BOE gas 600000mcf/6 100000 BOE
55000 BOE 200000 BOE
Amortize
Proved properties 70,000
70,000/ 55000BOE+ 200000BOE * 55000 BOE = $ 15098
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.