Renewable Power Ltd.

Revenue and Costs for 2034:

• Revenue: $1,700,000
• G&G Costs: $1,500,000
• Acquisition Costs: $7,000,000
• Exploratory Dry Holes: $9,000,000
• Successful Exploratory Wells: $7,500,000
• Development Wells, Dry: $3,500,000
• Development Wells, Successful: $3,200,000
• Production Facilities: $1,900,000
• Production Costs: $240,000

Amortization for 2034:

• SE: $450,000
• FC: $800,000

Accumulated DD&A:

• SE: $950,000
• FC: $2,400,000

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.