Q 200. A petroleum company explores 10 locations, incurring cost of $10 million at each. It discovers oil and gas reserves at three of these locations. As per one method the asset amount of the newly discovered reserves will be recorded as $100 million. If it uses the other method, the asset amount will be recorded as $30 million and the other $70 million will be charged to expense. Explain the methods discussed in the case study.