Author Question: Jimmy acquires an oil and gas property interest for $600,000. Jimmy expects to recover 200,000 ... (Read 228 times)

daltonest1984 · **on:** Sep 13, 2020

Question 1

In calculating depletion of natural resources each period,
◦ cost depletion must be used.
◦ percentage depletion must be used.
◦ the greater of cost depletion or percentage depletion must be used.
◦ the smaller of cost depletion or percentage depletion must be used.

Question 2

Jimmy acquires an oil and gas property interest for $600,000. Jimmy expects to recover 200,000 barrels of oil. Intangible drilling and development costs are $160,000 and are charged to expense. Other expenses are $40,000. During the year, 25,000 barrels of oil are sold for $800,000. Jimmy's depletion deduction is
◦ $120,000.
◦ $75,000.
◦ $160,000.
◦ $600,000.

Bsand8 · **Reply #1 on:** Sep 13, 2020

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