Question

In: Accounting

QUESTION 1 Concerning current accounting for oil and gas properties, which statement is true? The successful-efforts...

QUESTION 1

Concerning current accounting for oil and gas properties, which statement is true?

		The successful-efforts method must be used.
		The reserve-recognition method must be used.
		Either the successful-efforts method or the full-cost method may be used.
		The full-cost method must be used.

QUESTION 2

Property acquired through donation is recorded at

		its book value
		its fair market value
		its cost
		zero

QUESTION 3

Which one of the following types of assets should not be classified as property, plant, and equipment?

		leasehold improvements
		fully-depreciated building (still in use)
		idle land and buildings
		long-lived tangible assets

QUESTION 4

Maxa Marina exchanged a boat with a cost of $80,000 (now 75% depreciated) for another boat with a current fair value of $27,000. No boot was paid or received. The new boat will perform the same function as the old boat, but is expected but cash flows are expected to last for 5 years longer than with the old boat. Maxa should record the new boat at

		$20,000
		$27,000
		$ 7,000
		$ 0

QUESTION 5

Bob’s Excavating purchased some equipment by issuing a three-year 6% note for $8,000 when the market rate for an obligation of this nature was 8%. The interest is payable annually. Actuarial information for three periods follows:

	6%	8%
Future amount of 1	1.191016	1.259712
Future amount of annuity of 1	3.183600	3.246400
Present value of 1	0.839619	0.793832
Present value of annuity of 1	2.673012	2.577097

At the date of purchase, what amount should be debited to Equipment?

		$7,587.66
		$6,716.96
		$6,350.66
		$6,633.70

Solutions

Expert Solution

Question 1:

Ans

Either the successful-efforts method or the full-cost method may be used.

Question 2:

Ans

its fair market value

Question 3:

Ans:

idle land and buildings

Question 4:

Ans

Ans:$27,000

Carrying value of the asset given up = $80,000 - 60,000($80,000*75%) = $20,000

Fair value of the asset received = $27,000

Realized gain = Fair value of the asset received - Carrying value of the asset given up

= $27,000 - $20,000

= $7,000

New asset is recorded at fair value of the asset received as expected to last for 5 years longer than with the old boat.

New asset should be record at value of $27,000.

Question 5:

Ans:$7587.66

Interest on note at 7% = $8000*6% = $480

Present value of interest on note for three periods = $480*2.577097 = $1237

present value of rate of the equipment $8000*0.793832 = $6350.656

Amount should be debited to equipment : $1237 +$6350.656=$7587.656=$7587.66(rounded Off)

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Which of the following is true of the full cost and successful efforts accounting methods? A....

Which of the following is true of the full cost and successful efforts accounting methods? A. In any given year, income under the full cost method is always higher than under the successful efforts method. B. Larger oil and gas companies are quite sensitive to the full cost /successful efforts choice since the amounts of their exploration and development costs are large in comparison to their total assets. C. Cumulative income is the same under both the full cost and...

Change in Accounting Method Instructions Delta Oil Company uses the successful-efforts method to account for oil...

Change in Accounting Method Instructions Delta Oil Company uses the successful-efforts method to account for oil exploration costs. Delta started business in 2014 and prepared the following income statements: DELTA OIL COMPANY Income Statements For the Years Ended December 31, 2014 - 2015 1 2014 2015 2 Revenue $1,000,000.00 $3,000,000.00 3 Other expenses 400,000.00 1,300,000.00 4 Exploration expenses 120,000.00 238,000.00 5 Income before income taxes $480,000.00 $1,462,000.00 6 Income tax expense (30%) 144,000.00 438,600.00 7 Net income $336,000.00 $1,023,400.00 8...

QUESTION 1 Concerning accounting for warranties, which of the following statements is true? The expense warranty...

QUESTION 1 Concerning accounting for warranties, which of the following statements is true? The expense warranty accrual method is the only method accepted for federal income tax purposes. The modified cash basis is the method used for for tax reporting. The sales warranty accrual method uses a percentage of completion approach to warranty revenue recognition. The modified cash basis recognizes warranty expense when cash is received on the sale. QUESTION 2 Which of the following is the most appropriate way...

In the Fundamentals of Oil and Gas Accounting book; Which oil and gas assets are subject...

In the Fundamentals of Oil and Gas Accounting book; Which oil and gas assets are subject to impairment testing for successful effort companies?

Which of the following is correct for the impairment of proved oil and gas properties under...

Which of the following is correct for the impairment of proved oil and gas properties under the SE method? Group of answer choices A. A temporary decline in the price of oil is sufficient to require testing for impairment. B. A hostile action by the government of a country in which the company is operating would likely indicate the need to test for impairment of those assets. C. The company compares the carrying value of the proved property to its...

Question 1. Which of the following are properties of a parallel circuit? the current is the...

Question 1. Which of the following are properties of a parallel circuit? the current is the same in each device in the circuit current is divided among devices in the circuit the voltage is divided among devices in the circuit both the voltage is the same across each device in the circuit and the current is divided among devices in the circuit Question 2. Which of the following is a FALSE statement? light travels slower in Glass than in Water...

Which of the following statement is true in regards to accounting? a. Accounting standards are no...

Which of the following statement is true in regards to accounting? a. Accounting standards are no longer evolving because the U.S. has had an established capital market system with formal accounting standards since the early 1930s. b. The AICPA developed the conceptual framework and issues Statements of Financial Accounting Concepts that address current and future accounting problems c. The U.S. is not formally adopting international accounting standards, however; the U.S. standard setter still works informally with its London-based counterpart in...

1)The successful-efforts method requires entities to group their assets by type: proved or unproved properties. T/F...

1)The successful-efforts method requires entities to group their assets by type: proved or unproved properties. T/F Proved properties are required to be tested for impairment when events or circumstances indicate the carrying amount may not be recoverable, however, many companies choose to test them annually in conjunction with the receipt of an annual reserve report. T/F Proved properties contain estimated quantities of oil and gas that geoscience and engineering data demonstrate with reasonable certainty to be economically producible in the...

Delta Oil Company uses the successful-efforts method to account for oil exploration costs. Delta started business...

Delta Oil Company uses the successful-efforts method to account for oil exploration costs. Delta started business in 2014 and prepared the following income statements: DELTA OIL COMPANY Income Statements For the Years Ended December 31, 2014 - 2015 1 2014 2015 2 Revenue $1,000,000.00 $3,000,000.00 3 Other expenses 400,000.00 1,300,000.00 4 Exploration expenses 120,000.00 238,000.00 5 Income before income taxes $480,000.00 $1,462,000.00 6 Income tax expense (30%) 144,000.00 438,600.00 7 Net income $336,000.00 $1,023,400.00 8 Earnings per share $3.36 $10.23...

Instructions Delta Oil Company uses the successful-efforts method to account for oil exploration costs. Delta started...

Instructions Delta Oil Company uses the successful-efforts method to account for oil exploration costs. Delta started business in 2014 and prepared the following income statements: Question not attempted. DELTA OIL COMPANY Income Statements For the Years Ended December 31, 2014 - 2015 1 2014 2015 2 Revenue $1,000,000.00 $3,000,000.00 3 Other expenses 400,000.00 1,300,000.00 4 Exploration expenses 120,000.00 238,000.00 5 Income before income taxes $480,000.00 $1,462,000.00 6 Income tax expense (30%) 144,000.00 438,600.00 7 Net income $336,000.00 $1,023,400.00 8 Earnings...

Subjects