Which of the following statements is true about successful efforts accounting?
A)It is a depreciation method
B)All costs are recorded as assets and then depleted over the resource's useful life.
C)The cost of a dry well would be written off immediately as a loss.
D)The cost of successful exploration is recorded as an asset and is not written off.

Question

Quizplus · Accepted Answer

Successful efforts accounting allows companies to capitalize costs associated with successful exploration activities, while costs related to unsuccessful exploration efforts, such as dry wells, are immediately expensed and written off as a loss. This approach contrasts with full cost accounting, where all exploration costs are capitalized and amortized over time, regardless of the outcome of specific exploration efforts.

Which of the Following Statements Is True About Successful Efforts