Reference no: EM132465123
Question
Problem (a) Discuss the major differences between impairment rules for proved properties and unproved properties for successful efforts companies.
Problem (b) Sandman Oil Company, a successful efforts company, has three fields, A, B, and C. Costs and cash flows for the three fields are as follows:
Field A Field B Field C
Net capitalized costs 4,000,000 5,000,000 6,000,000
Expected undiscounted future cash flows 4,500,000 4,000,000 5,000,000
Expected discounted future cash flows 3,850,000 3,900,000 3,700,000
Question 1: For each field (1) determine if impairment is required, and (2) if applicable, calculate the amount of the impairment