BB Petroleum, a giant oil company, holds reserves of oil and gas assets. At the end of 2016, assume the cost of BB Petroleum's oil reserves totaled $208 billion, representing 16 billion barrels of oil in the ground?
1. Which depreciation method is similar to the depletion method that BB Petroleum and other oil companies use to compute their annual depletion expense for the oil removed from the ground?
2. Suppose the company removed 1,000 million barrels of oil during 2017. Record this event. Show amounts in billions?
3. Assume that, of the amount removed in (2), the company sold 900 million barrels. Make the cost of sales entry?