Kingdom of Saudi Arabia

Royal Commission at Yanbu

Yanbu University College
Department of Management Sciences and Industrial Management Technology
Yanbu Al-Sinaiyah

«A.Y.: 2023-2024»
ACCT316 – Oil & Gas Accounting
Classwork-02 FIRST SEMESTER
1445 (451)

DAY DATE TIME

Friday 29th September 2023

Serial Number

ID:

Student NAME:

Section:

Teacher: Dr. Mohammad Aamir Khan

GENERAL INSTRUCTIONS:
FOR INSTRUCTOR USE: CLO TABLE
1- Answers should be written by hand
only. Q. No. Max Mark Max Scored

2- Untidy work will be penalized Q1

3- Zero will be awarded if copied from CLO2- Q2
others. Competence 3.1 Q3
Q4
Q5
TOTAL 04.00

ACCT316-Mod02-Ch02 Classwork 02 - Page 1 of 9

Q1- Unger Petroleum Company incurred the following costs during 2018:

3-Feb Cost of G&G activities to locate an oil prospect 200,000

9-Mar Acquisition costs for a 750 acre lease: lease bonus
75 per acre; other costs incurred in acquiring the property 3,000
June 1 Dry-hole costs of an exploratory well 324,750
June 28 Successful exploratory well costs 327,000
August 27 Cost of production facilities such as flow lines and separators 215,000
5-Sep Production costs 72,000

REQUIRED:
Prepare journal entries for the above transactions using the successful efforts method of accounting.

ACCT316-Mod02-Ch02 Classwork 02 - Page 2 of 9

Q2-
The following costs for Davison Lease were all incurred during 2020
Acquisition costs 25,000
G&G costs 75,000
Exploratory dry holes 1,250,000
Successful exploratory holes 250,000
Development wells, dry 150,000
Development wells, successful 375,000
Cost of production facilities 125,000
Production costs 50,000
DD&A* 52,000 (SE); 115,000 (FC)
Accumulated DD&A 140,000 (SE); 325,000 (FC)
Revenue from sale of oil 210,000
*Depreciation, depletion, and amortization
REQUIRED:
Prepare the 2020 income statements and unclassified partial balance sheets for a successful efforts
(SE) company and a full cost (FC) company.

ACCT316-Mod02-Ch02 Classwork 02 - Page 3 of 9

ACCT316-Mod02-Ch02 Classwork 02 - Page 4 of 9
Q3-
The following costs were incurred by Force Petroleum Company during the fiscal year ending May 31, 2020.

June 4, 2019 G&G costs 75,000

Aug 19, 2019 Lease bonus on a 1,200 acre lease 80 /acre
Other acquisition costs 5,000
Dec 1, 2019 Dry-hole costs of an exploratory well 310,000
Feb 1, 2020 Successful well costs 550,000
Apr 3, 2020 Cost of production facilities 270,000
Apr 30, 2020 Production costs 27,000

ACCT316-Mod02-Ch02 Classwork 02 - Page 5 of 9

Q4-
Revenue and costs for Gravity Petroleum for the year 2019 are presented below:

Revenue 500,000
G&G costs 500,000
Acquisition costs 1,000,000
Exploratory dry holes 3,000,000
Successful exploratory wells 2,000,000
Development wells, dry 1,500,000
Development wells, successful 700,000
Production facilities 600,000
Production costs 150,000

Successful Efforts Full Cost

Amortization for 2019 100,000 300,000

Accumulated DD&A 400,000 600,000

ACCT316-Mod02-Ch02 Classwork 02 - Page 6 of 9

ACCT316-Mod02-Ch02 Classwork 02 - Page 7 of 9
Q5-
Unger Petroleum Company incurred the following costs during 2018:
3-Feb Cost of G&G activities to locate an oil prospect 100,000
March 9 Acquisition costs for a 500 acre lease: lease bonus $ 3,500
40 /acre; other costs incurred in acquiring the property
June 1 Dry-hole costs of an exploratory well 224,000
June 28 Successful exploratory well costs 318,000
27-Aug Cost of production facilities such as flow lines and separators 205,000

5-Sep Production costs 85,000

REQUIRED:
Prepare journal entries for the above transactions using the full cost method of accounting

ACCT316-Mod02-Ch02 Classwork 02 - Page 8 of 9

Q6-
Libby Petroleum incurred the following costs during 2019:

Jan. 23 G&G Costs 75,000

Feb. 1 Lease acquisition costs 85,000
April 2 Exploratory dry-hole costs 450,000
April 29 Successful exploratory well costs 560,000
July 1 Developmental well costs 140,000
Aug. 19 Production facility costs 80,000
Sept. 17 Production costs 63,000

ACCT316-Mod02-Ch02 Classwork 02 - Page 9 of 9