FutureTech Ltd.

Revenue and Costs for 2024:

• Revenue: $900,000
• G&G Costs: $700,000
• Acquisition Costs: $2,500,000
• Exploratory Dry Holes: $4,500,000
• Successful Exploratory Wells: $3,200,000
• Development Wells, Dry: $1,200,000
• Development Wells, Successful: $1,000,000
• Production Facilities: $950,000
• Production Costs: $150,000

Amortization for 2024:

• SE: $210,000
• FC: $380,000

Accumulated DD&A:

• SE: $520,000
• FC: $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.