Geothermal Energy Inc.

Revenue and Costs for 2033:

• Revenue: $1,600,000
• G&G Costs: $1,400,000
• Acquisition Costs: $6,500,000
• Exploratory Dry Holes: $8,500,000
• Successful Exploratory Wells: $7,000,000
• Development Wells, Dry: $3,200,000
• Development Wells, Successful: $3,000,000
• Production Facilities: $1,800,000
• Production Costs: $230,000

Amortization for 2033:

• SE: $420,000
• FC: $750,000

Accumulated DD&A:

• SE: $900,000
• FC: $2,200,000

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.