(a)Alpha company, a full cost company, has the following information available:

Acquisition costs of unproved properties, net of impairment$ 150,000

Nondrilling costs of unproved properties - direct200,000

Abandoned property costs50,000

Dry holes on unproved properties300,000

Capitalized costs of proved properties1,200,000

Costs of major development project (not included above)400,000

Accumulated DD&A350,000

PV of future gross revenues2,050,000

PV of future related costs700,000

Lower of cost or market of unproved properties275,000

Apply the full cost ceiling test assuming that all possible costs are excluded from the amortization base (ignore income taxes).

(b)Compare the full cost ceiling test to the impairment rules for successful efforts companies.