Response to the following problem:
Chevron, the giant oil company, holds huge reserves of oil and gas assets. Assume that at the end of 20X6, Chevron's cost of mineral assets totaled approximately $18 billion, representing 2.4 billion barrels of oil and gas reserves in the ground.
1. Which depreciation method does Chevron use to compute its annual depletion expense for the minerals removed from the ground?
2. Suppose Chevron removed 0.8 billion barrels of oil during 20X7. Record Chevron's depletion expense for 20X7.