Exploratory Company is an oil and gas exploration firm. During 2013, Exploratory engaged in 86 different exploratory

Question:

Exploratory Company is an oil and gas exploration firm. During 2013, Exploratory engaged in 86 different exploratory projects, only 20 of which were successful. The total cost of this exploration effort was $24 million, $5.6 million of which was associated with the successful projects. As of the end of 2013, production had not yet begun at the successful sites.
1. Using the successful efforts method of accounting for oil and gas exploration costs, how much exploration expense would be shown in Exploratory's income statement for 2013? How much of the exploration cost will be capitalized and shown as an asset on the company's as of December 31, 2013?
2. Repeat (1) using the full cost method.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...