Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright

Exercise 21

Gusher Oil Company began operations on 1/5/2011 and has acquired only two
properties. The two properties, which are both considered significant, are located in
different states. Lease B was proved on 1/1/2013. Costs incurred from 1/5/2011 through
12/31/2013 are as follows: Other information:
The company also owns a building that it purchased 1/1/2011 at a cost of $500,000.
The building houses the corporate headquarters and has an estimated life of 20 years
(ignore salvage). The operations conducted in the building are general in nature and
are not directly attributable to any specific exploration, development, or production
activities. Since the building is not related to exploration, development, or production,
it is depreciated using straight-line depreciation for financial accounting.
REqUIRED:
a. Give the entry to record DD&A for 2013 under full cost accounting, assuming all
possible costs are excluded from amortization.
b. Give the entry to record DD&A for 2013 under successful efforts accounting.