EcoPower Ltd.

Revenue and Costs for 2041:

• Revenue: $2,400,000
• G&G Costs: $2,200,000
• Acquisition Costs: $10,500,000
• Exploratory Dry Holes: $12,500,000
• Successful Exploratory Wells: $11,000,000
• Development Wells, Dry: $5,200,000
• Development Wells, Successful: $5,000,000
• Production Facilities: $2,600,000
• Production Costs: $310,000

Amortization for 2041:

• SE: $660,000
• FC: $1,150,000

Accumulated DD&A:

• SE: $1,300,000
• FC: $3,800,000

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.