Bright Future Inc.

Revenue and Costs for 2025:

• Revenue: $750,000
• G&G Costs: $550,000
• Acquisition Costs: $1,500,000
• Exploratory Dry Holes: $3,500,000
• Successful Exploratory Wells: $2,500,000
• Development Wells, Dry: $800,000
• Development Wells, Successful: $600,000
• Production Facilities: $900,000
• Production Costs: $120,000

Amortization for 2025:

• SE: $180,000
• FC: $320,000

Accumulated DD&A:

• SE: $450,000
• FC: $600,000

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.