Data for Porch Oil Company is as follows for all U.S. properties:

a. Apply the full cost ceiling test and record any entries necessary, assuming that all possible costs are excluded from amortization.

b. Apply the full cost ceiling test and record any entries necessary, assuming that all possible costs are being amortized.

Transcribed Image Text:

Acquisition costs of unproved property, net of impairment. . Nondrilling evaluation costs of unproved property direct . . Abandoned costs. . . . Dry holes on unproved property $ 300,000 400,000 100,000 600,000 Capitalized costs of proved property. 2,400,000 Costs of major development project (costs not included above). 800,000 Accumulated DD&A (assume same for part a and part b).. 700,000 Deferred income taxes. . . . 500,000 PV of future gross revenue 4,100,000 PV of future related costs. 1,400,000 Income tax effects books versus tax. 500,000 LCM of unproved properties. 550,000