Renewable Innovations Inc.

Revenue and Costs for 2046:

• Revenue: $2,900,000
• G&G Costs: $2,700,000
• Acquisition Costs: $13,000,000
• Exploratory Dry Holes: $15,000,000
• Successful Exploratory Wells: $13,500,000
• Development Wells, Dry: $6,500,000
• Development Wells, Successful: $6,200,000
• Production Facilities: $3,100,000
• Production Costs: $360,000

Amortization for 2046:

• SE: $810,000
• FC: $1,400,000

Accumulated DD&A:

• SE: $1,550,000
• FC: $4,800,000

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.