Accounting Questions

(1) Global uses SE accounting and gas the following information on Blocks A and B that are each individually significant: Year Transaction Block A Block B 200A Shooting rights 50,000 None G&G 80,000 35,000 Signing bonus 200,000 110,000 Impairment 15% 20% What is the amount of impairment on Blocks A and B under U.S. GAAP and under International GAAP? (2) Using U.S. GAAP and successful-efforts, assume that the book value of Block D (a proved field) at the beginning of year 2 is $3, 100,000. Compute the amount of impairment, if any, for years 2, and 3 given the following: Year 2 Year 3 DD&A expense $ 400,000 $ 350,000 Undiscounted FNCF 2,600,000 2,100,000 Discounted FNCF 2,000,000 1,600,000 (3) Assume that Peters Co. has 60% of the WI in High Island Block #3. The drilling platform reaches location on the block in January of Year 1. At that time, Peters estimates that abandonment and restoration will take place in 15 years at a total cost of $10 million. Peter's cost of capital is 6%. In January of Year 3, Peters reassesses the ARO and now estimates that the total cost of abandonment and restoration will be $12 million. Peter's cost of capital is now 7%. What will be the balance in the ARO account at December 31th of Year 3? (use the below present value table.) #Year's 1% 2% 3% 4% 5% 6% 7% 1 990 980 971 962 952 943 935 2 980 961 943 925 907 890 .873 3 971 942 915 .889 864 840 .816 4 961 924 888 855 823 792 763 5 951 906 863 .822 784 747 .713 6 942 888 837 790 746 705 .666 7 933 871 .813 .760 .711 .665 .623 8 923 853 789 731 .677 627 .582 9 .914 837 766 .703 .645 592 .544 10 905 820 744 .676 .614 558 .508 11 .896 804 722 .650 .585 527 .475 12 .887 788 701 .625 .557 .497 .444 13 879 773 .681 601 530 469 .415 14 .870 758 .661 577 .505 442 388 15 .861 743 .642 .555 .481 .417 .362