In 2015, Hart Co. invested $5,500,000 in oil well exploration activities. Sixty percent of the drilling was successful and resulted in commercial quantities of oil being found.
Required:
a.Indicate the amount of drilling expense Hart Co. would recognize in 2015 if the full-cost method is in use.
b.Indicate the cost that would be reported on the balance sheet as oil and gas properties if the successful-efforts method is in use.

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The Answer of In 2015, Hart Co. invested $5,500,000 in oil well exploration activities. Sixty percent of the drilling was successful and resulted in commercial quantities of oil being found.
Required:
a.Indicate the amount of drilling expense Hart Co. would recognize in 2015 if the full-cost method is in use.
b.Indicate the cost that would be reported on the balance sheet as oil and gas properties if the successful-efforts method is in use.