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Exercises (2): Assumed the area is fully devdos found at the end of next year 2015 in the previous example the estimated reserves will be 19,000,000 barrels, and the amount extracted from the contract during 2016 was 600.000 barrels, and the accumulated depletion 500,000 s. and the contract cost 12.500.000, the drilling, preparation cont 5.000.000 . Require: Determine the depletion rate , depletion expenses, and Prepare the necessary journal entries. Answer: FRIST: Determine the depletion rate: 1 - The depletion rate of the Production cost Production cost contract + drilling) - Accumulated depletion Reserve is expected at end of year + the amount of production during the year - (12.500,000 + 5,000,000) -- 500,000/(49,000,000+600,000) - 17,000,000/49.660,000 - 0.34 S/barrel. SECOND: Determine the depletion expenses: Depletion expenses - Depletion rate of production cost * production during the year Depletion expenses - 0.34 600,000 barrel 204.000 THIRD Journal entries Date Accounts Depletion expenses of producing Credit debit 204.000 wells 264.000 Accumulated Depletion of 14 producing well Profit&loss Depletion expenses of producing wells 204.000 204.000 ASSIGNMENT 2 EXERCISE 1 PLC Petroleum company had the following data at the end of its financial year ended 31- 12-2011 Capitalized cost at the end of the year 1.700.000 Accumulated depletion 100.000 Reserves estimated at beginning of the year 5.000.000 bbls Production during the year 250.000 bbls Required: compute the depletion EXERCISE 2 ABC Petroleum company incurred the following costs for a development well drilled during 2011 in a recently acquired concession: Site survey 150000 Busch clearing 500000 Road building and bridges 2500000 Tubing and casing pipes 1400000 Weil head assembly and valves 2100000 Flow lines 4000000 Separators 10000000 Treaters and heaters 2000000 Desander 1500000 Required: 1. Prepare journal entries to record the cost of the development well, assuming the company uses successful efforts method. Successful effort Wells intangible) 315000 Wells (equipment) 21000000 Bank 24150000 2. Full cost method ? Exercises (2): Assumed the area is fully devdos found at the end of next year 2015 in the previous example the estimated reserves will be 19,000,000 barrels, and the amount extracted from the contract during 2016 was 600.000 barrels, and the accumulated depletion 500,000 s. and the contract cost 12.500.000, the drilling, preparation cont 5.000.000 . Require: Determine the depletion rate , depletion expenses, and Prepare the necessary journal entries. Answer: FRIST: Determine the depletion rate: 1 - The depletion rate of the Production cost Production cost contract + drilling) - Accumulated depletion Reserve is expected at end of year + the amount of production during the year - (12.500,000 + 5,000,000) -- 500,000/(49,000,000+600,000) - 17,000,000/49.660,000 - 0.34 S/barrel. SECOND: Determine the depletion expenses: Depletion expenses - Depletion rate of production cost * production during the year Depletion expenses - 0.34 600,000 barrel 204.000 THIRD Journal entries Date Accounts Depletion expenses of producing Credit debit 204.000 wells 264.000 Accumulated Depletion of 14 producing well Profit&loss Depletion expenses of producing wells 204.000 204.000 ASSIGNMENT 2 EXERCISE 1 PLC Petroleum company had the following data at the end of its financial year ended 31- 12-2011 Capitalized cost at the end of the year 1.700.000 Accumulated depletion 100.000 Reserves estimated at beginning of the year 5.000.000 bbls Production during the year 250.000 bbls Required: compute the depletion EXERCISE 2 ABC Petroleum company incurred the following costs for a development well drilled during 2011 in a recently acquired concession: Site survey 150000 Busch clearing 500000 Road building and bridges 2500000 Tubing and casing pipes 1400000 Weil head assembly and valves 2100000 Flow lines 4000000 Separators 10000000 Treaters and heaters 2000000 Desander 1500000 Required: 1. Prepare journal entries to record the cost of the development well, assuming the company uses successful efforts method. Successful effort Wells intangible) 315000 Wells (equipment) 21000000 Bank 24150000 2. Full cost method

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