Reserve recognition accounting
A) is presently the generally accepted accounting method for financial reporting of oil and gas reserves.
B) is a historical cost method similar to the full cost approach and the successful efforts approach.
C) is used for reporting of oil and gas reserves for federal income tax purposes.
D) requires estimates of future production costs, the appropriate discount rate, and the expected selling price of oil and gas reserves.

Question

Quizplus · Accepted Answer

Reserve recognition accounting requires estimates of future production costs, the appropriate discount rate, and the expected selling price of oil and gas reserves to be made. It is not presently the generally accepted accounting method for financial reporting of oil and gas reserves, nor is it used for reporting of oil and gas reserves for federal income tax purposes. It is also not a historical cost method like the full cost and successful efforts approaches.

Reserve Recognition Accounting