Lucky Lake Oil Company (LLOC) paid $3,000,000 for an oil reserve estimated to hold 50,000 barrels of oil. Oil production is expected to be 10,000 barrels in year 1, 30,000 barrels in year 2, and 10,000 barrels in year 3. LLOC expects to begin selling barrels from its oil inventory in year 2.
Required:
Assuming these estimates are accurate, describe the amounts, financial statements, and classifications that would be used for the oil reserves and oil inventory at the end of year 1?