Purchase Price Of Oil Reserves And Related Costs

Purchase Price Of Oil Reserves 6200000add Related Costsgeol

The assignment involves calculating depletion expense for oil reserves using given data, then composing two paragraphs: one about the homework task and another about a peer’s discussion post. The task starts with purchase costs of oil reserves totaling $6,200,000 plus related costs such as geological tests and drilling preparation, culminating in a total cost. To compute depletion per unit, the formula used is: (Cost – Residual value) / Estimated total units = ($7,200,000 – $0) / 500,000 barrels = $14.40 per barrel. The depletion expense for the period is then calculated by multiplying depletion per unit by the number of units extracted, which is 90,000 barrels. The first paragraph should describe this process in 8-10 sentences, emphasizing the rationale and steps taken to determine depletion expense. The second paragraph should reflect on another student's post discussing ethical dilemmas, summarizing their viewpoints in 5 sentences. The overall task is to analyze the provided financial data to perform depletion calculations and to critically evaluate a peer’s ethical dilemma discussion within a concise and structured written format.

Paper For Above instruction

The initial task involves understanding and calculating the depletion expense associated with oil reserves, a common accounting practice in natural resource industries. The purchase of oil reserves for $6,200,000, along with related costs such as geological tests and drilling preparation, results in a total capitalized cost that is subject to depletion over the estimated recoverable units. To determine the depletion per barrel, the formula applied is: (Total cost – Residual value) divided by the total estimated units of extraction, which in this case is 500,000 barrels. Using the provided figures, the depletion per barrel amounts to $14.40, calculated as ($7,200,000 – $0) / 500,000 barrels. During the first year, McCabe Oil Company extracted and sold 90,000 barrels, thus incurring a depletion expense of $1,296,000, derived by multiplying $14.40 by 90,000 barrels. This depletion expense reduces the book value of the oil reserves on the balance sheet and matches costs with revenues generated from oil sales. Such calculations ensure compliance with the matching principle in accounting, accurately reflecting resource consumption over time. The depletion expense not only affects financial statements but also influences tax calculations and resource valuation. This systematic approach helps companies account for natural resource depletion consistently. Overall, understanding how to compute and record depletion enhances the accuracy of financial reporting in resource-focused industries.

Discussion on Ethical Dilemmas

Another student's post examines a complex ethical scenario in anthropological fieldwork involving a killing in a Southeast Asian village. The student discusses whether the researcher, Thompson, should destroy her detailed records of the event upon anticipating police questioning or remain silent to protect the villagers. The post highlights the moral tension between documenting sensitive cultural events and potential legal consequences. It emphasizes the importance of confidentiality and the ethical obligation to protect subject identities, especially in situations involving violence or legal intervention. The student's reflection demonstrates an understanding of ethical principles like nonmaleficence and confidentiality, illustrating the challenging decisions anthropologists face in maintaining trust while complying with legal responsibilities. Overall, their commentary underscores the importance of ethical awareness and cultural sensitivity in research practice.

References

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