Alaska Energy Corporation paid cash to acquire land to be used for oil production.The costs incurred by Alaska Energy were the following:
Estimates were made that 3,885,000 gallons of crude oil can be extracted from the site over the life of the asset.
Required: a)Prepare the journal entry(ies)to record the purchase of the oil field.
b)Given that Alaska Energy was able to extract
230,000 gallons in the first year,
675,000 gallons in the second year,and
554,000 gallons in the third year
Calculate the depletion charge for each year.

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The Answer of Alaska Energy Corporation paid cash to acquire land to be used for oil production.The costs incurred by Alaska Energy were the following:
Estimates were made that 3,885,000 gallons of crude oil can be extracted from the site over the life of the asset.
Required: a)Prepare the journal entry(ies)to record the purchase of the oil field.
b)Given that Alaska Energy was able to extract
230,000 gallons in the first year,
675,000 gallons in the second year,and
554,000 gallons in the third year
Calculate the depletion charge for each year.

Alaska Energy Corporation Paid Cash to Acquire Land to Be