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Gnesinka [82]
3 years ago
14

Pacific Petroleum holds huge reserves of oil assets. Assume that at the end of 2018​, Pacific Petroleum​'s cost of oil reserves

totaled $ 50,000,000​, representing 5,000,000 barrels of oil.
Requirement:
1. Which method does Pacific Petroleum use to compute​ depletion?
Business
1 answer:
const2013 [10]3 years ago
3 0

Answer:

Units of production method

Explanation:

The formula to compute the depreciation expenses under the units-of-production method:

Depreciation per miles or hours = (Original cost - residual value) ÷ (estimated production)  

For first-year or for another year, the depreciation expense would be

= Production units in a year × depreciation per miles or per hour

So, for computing the depletion, the unit of production method is used                                        

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Answer:

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