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full cost DD&A. According activitie decommissioning costs that will be incurred as a result of future development a Those amounts are to be included

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full cost DD&A. According activitie decommissioning costs that will be incurred as a result of future development a Those amounts are to be included in the costs to be amortized. SFAS No. 143 is discussed detail in chapter 9. EXAMPLE DD&A: Future Development Costs Data for Tyler Company as of December 31, 2012, is as follows: Unrecovered costs (net capitalized costs). Production during 2012... Proved reserves, December 31, 2012. $2,000,000 100,000 6,000,000 Tyler Company estimates that future expenditures to develop partially developed propertie (proved properties) will be $5,000,000. Tyler Company also estimates that the related future decommissioning costs will be $1,000,000, with salvage of $100,000. (Decommissioning cons related to equipment and facilities already installed have been previously recorded and would be included in the $2,000,000 of unrecovered costs.) DD&A Calculations Costs to be amortized: Unrecovered costs Add: Future development costs Add: Future decommissioning costs related to future development costs Less: Future salvage Total costs to amortize DD&A $7,900,000 6,000,000 bbl+100,000 bbl x 100,000 bbl = $129,508 $2,000,000 5,000,000 1,000,000 (100,000 $7.900.000

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