The method used to account for oil and gas exploration costs that capitalizes the exploration costs of productive wells is the:
A) reserve recognition accounting.
B) successful efforts approach.
C) soft asset approach.
D) full-cost approach.

Question

The method used to account for oil and gas exploration costs that capitalizes the exploration costs of productive wells is the: 
A) reserve recognition accounting.
B) successful efforts approach.
C) soft asset approach.
D) full-cost approach.

Quizplus · Accepted Answer

The successful efforts approach capitalizes the exploration costs of wells that are successful in finding oil and gas reserves, while costs of unsuccessful wells are expensed.

The Method Used to Account for Oil and Gas Exploration