14 41% - 00:43 as Oil Company Began. erations At Its Southfork. On March 17, 2000 Texas O Company began operations to Southfork Oil Field Theol Seld had been acquired eral years earlier at a cost of $14.4 million. The field is estimated to contin4 million barrels of oil and to have a residual value of $2 million after all of the oil has been pumped out Equipment costing 5 560,000 was purchased for use at the Southfork Oil Field This equipment will have no econome usefulness once Southfork is depleted therefore, it is deprecated on-of- output basis Texas Oil also balta pipeline at a cost of $3,400,000 to serve the Southfork Oil Field. Although this pipeline is physically capable of being used for many years, its economic sefulness is limited to the productive Life of the Southfork Oil Field and there is no residual value Therefore, depreciation of the pipeline alio based on the estimated umber of barrels of oil to be produced Production at the Southfork Oil Field amounted to 460,000 barrels un 2000 and 530,000 barrels in 2001 Instructions a) Compute the per-barrel depletion rate of the cal field and the per-barrel depreciation rates of the equipment and the pipeline b) Make the year-end adjusting entries required at December 31, 2000, and December 31, 2001, to record depletion of the oil field and the related depreciation. (Make separate testo record depletion and depreciations of the post od pipeline) c) Show how the Southfork Oil Field should appear in Texas Oil's balance sheet at the end of 3001 (Use "Od Reserves Southfork Oil Field the title of the account show accumulated depletion, but do not include the equipment of pipeline) w transcribed image text