Question $4$: Mineral resources $(13$ marks, $20$ minutes$)$

Alberta Corp is in the business of oil and gas exploration and production. During $2021,$ the

Company explored two new sites. By the December $31,2021$ year$-$end, both sites remained in

the exploration and evaluation stage. During $2022,$ evaluation of site Apollo was completed and

the site was deemed to have sufficient oil reserves; consequently, development of the site

began. However, by the end of $2022,$ site Braeden was determined to have no proven reserves.

The following is the cost of exploration and evaluation incurred on the two sites:

During $2022,$ Alberta Corp incurred a further $$1,357,000$ on tangible property, plant, and

equipment to develop an oil well for Site $A.$

Subsequent to $2022$ exploration activities, the Company determined Site A$\text{'}$s reserves at the

beginning of the year were $480,000$ barrels. During the year, the Company produced $57,600$

barrels of oil.

Required:

$($a$)$ Record the journal entries in $2021$ and $2022$ relating to the exploration and evaluation costs

using the successful efforts method. Assume that Alberta Corp has a policy of capitalizing

the costs of exploration and evaluation. $(6$ marks$)$

$($b$)$ Record the journal entries for depreciation, amortization and$/$or depletion for Site A in

Round values to the nearest dollar, if necessary. $(5$ marks$)$

$($c$)$ Prepare the balance sheet presentation for the assets at December $31,2022$ related to the

exploration, evaluation and development activities. Round values to the nearest dollar, if

necessary. $(2$ marks$)$