In 2016 Jones Company spends $6 million drilling oil wells. Seventy percent of the drilling is successful and results in commercial quantities of oil being found.
Required:
1) How much drilling expense should the company recognize under:
a) successful-efforts method b) full-cost method
2) What value is reported on the balance sheet for the Oil and Gas Properties under:
a) successful-efforts method b) full-cost method

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The Answer of In 2016 Jones Company spends $6 million drilling oil wells. Seventy percent of the drilling is successful and results in commercial quantities of oil being found.
Required:
1) How much drilling expense should the company recognize under:
a) successful-efforts method b) full-cost method
2) What value is reported on the balance sheet for the Oil and Gas Properties under:
a) successful-efforts method b) full-cost method

In 2016 Jones Company Spends $6 Million Drilling Oil Wells