BioEnergy Corp.

Revenue and Costs for 2032:

• Revenue: $1,500,000
• G&G Costs: $1,300,000
• Acquisition Costs: $6,000,000
• Exploratory Dry Holes: $8,000,000
• Successful Exploratory Wells: $6,500,000
• Development Wells, Dry: $3,000,000
• Development Wells, Successful: $2,800,000
• Production Facilities: $1,700,000
• Production Costs: $220,000

Amortization for 2032:

• SE: $390,000
• FC: $700,000

Accumulated DD&A:

• SE: $850,000
• FC: $2,000,000

Required:

1. Prepare income statements for a successful-efforts company and a full-cost company.
2. Prepare unclassified balance sheets for both companies.
3. Explain the difference in net income between the successful-efforts and full-cost companies.