On March 1, 2014, Anniston Company purchased an oil well at a cost of $1,966,000. It is estimated that 320,000 barrels of oil can be produced over the remaining life of the well and the residual value of the well will be $270,000. During 2014, 32,000 barrels of oil were produced and 25,300 barrels were sold. Which of the following statements is correct with respect to the accounting for the oil well?