Mod 5
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Purchase price of oil reserves |
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$ 6,200,000 |
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Add related costs: |
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Geological tests |
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Drilling preparation |
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Total cost of oil reserves |
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Depletion per unit |
= |
(Cost – Residual value) / Estimated total units |
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= |
($7,200,000 ̶ $0) / 500,000 barrels |
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= |
$14.40 per barrel |
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Depletion expense |
= |
Depletion per unit × Number of units extracted |
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= |
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= |
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