Natural Resources

Question 1

What costs related to natural resources should be capitalized?

Answer 1

1. Acquisition costs
2. Exploration costs
3. Development costs

Question 2

What are the methods for accounting for exploration costs?

Answer 2

1. Successful efforts method

2. Full costing method

Question 3

How is depletion for a period determined?

Answer 3

Depletion for a period = (depletion rate) x (number of units removed in period)

Question 4

How is depletion rate calculated?

Answer 4

Depletion rate = (Natural resources account balance - residual value) / (total estimated units