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Searing, Inc., made several drills for oil in 2012. The following data represent its results. Total costs $18,000,000 Total wells drilled 10 Good wells 6
Searing, Inc., made several drills for oil in 2012. The following data represent its results.
| Total costs | $18,000,000 |
| Total wells drilled | 10 |
| Good wells | 6 |
| Dry wells | 4 |
Assume that each well cost the same amount to drill.
Required:
| a. | Determine the amount to be capitalized and the amount to be expensed if the successful-efforts method is used. |
| b. | Determine the amount to be capitalized and the amount to be expensed if the full-cost method is used. |
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