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4 FUNDAMENTALS OF OIL & GAS ACCOUNTING Remember that under full cost, all exploration costs are capitalized whether succesfu or unsuccessful. However, the costs
4 FUNDAMENTALS OF OIL & GAS ACCOUNTING Remember that under full cost, all exploration costs are capitalized whether succesfu or unsuccessful. However, the costs of the exploratory dry hole are transferred into as account identified as unsuccessful rather than into wells and equipment. This transfe facilitates the use of certain procedures related to exclusion of costs from amortization The separation of exploratory dry-hole costs is also beneficial for managemen decision-making purposes and for regulatory purposes h. Tyler Company decides to abandon Lease B. Entry Abandoned leasehold costs. Unproved properties 47,480 47,480 Unproved Property 31,000 10,000 4,000 2,000 480 47.480 Remember that abandoned leasehold costs or impairment costs are not expensed but remain capitalized. DISPOSITION OF CARIT COSTS
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