Question - Delb Company is an oil and gas exploration firm. During 2008, Delb engaged in five different exploration projects. The costs associated with these projects are as follows:
Project 1 $ 325,000
Project 2 1713,000
Project 3 423,000
Project 4 240,000
Project 5 96,000
Total $1,262,000
Only Projects 2 and 5 were successful. As of the end of the year, production had not yet started at either of these two sites.
Assuming that all exploration costs were paid for in cash, make the journal entry to record the expenditures for the year using
(1) the successful efforts method.
(2) the full cost method.