Which of the following methods best reflects the volatility inherent in E&E activities?
A) The full cost method.
B) The appropriation method.
C) The area of interest method.
D) The successful efforts method.

Question

Quizplus · Accepted Answer

The successful efforts method is best for reflecting the volatility inherent in E&E activities because it only capitalizes costs related to successful exploration efforts and expenses any costs related to unsuccessful efforts. This results in higher variability in the reported earnings and assets, which better reflects the inherent uncertainty and risks involved in E&E activities.

Which of the Following Methods Best Reflects the Volatility Inherent