Data for Hill Oil Company are as follows for all US properties:

Acquisition costs of unproved property, net of impairment $..$ $$300,000$

Nondrilling evaluation costs of unproved property$-$direct $..400,000$

Abandoned costs $..............................................................1000$

Dry holes on unproved property $.......................600,000$

Capitalized costs of proved property $..................2,400,000$

Costs of major development project $($costs not included above$)800,000$

Accumulated DD&A $($assume same for part a and part b$)..700,000$

Deferred income taxes $.............................................................5000$

PV of future gross revenue $..........................................................$

PV of future related costs. $........................................................$

Income tax effects$-$books versus tax $......................................5000$

LCM of unproved properties $........................550,000$

REQUIRED:

a$.$ Apply the full cost ceiling test and record any entries necessary, assuming

that all possible costs are excluded from amortization.

b$.$ Apply the full cost ceiling test and record any entries necessary, assuming

that all possible costs are being amortized.