The full-cost method involves:
A) the writing off of the full cost of exploration and evaluation in each period.
B) the capitalisation of the full cost of exploration and evaluation in order to amortise it against total production revenue.
C) including overhead costs in the amount of exploration and evaluation costs written off or capitalised in each period.
D) tracing the full cost of pre-production costs to the product by using a process costing system to track and report the costs as they are incurred.

Question

Quizplus · Accepted Answer

The full-cost method involves capitalising the full cost of exploration and evaluation and amortising it against total production revenue. This includes direct costs and indirect overhead costs. It is a commonly used accounting method in the oil and gas industry.

The Full-Cost Method Involves